Recent agricultural policy developments in the context of the EU approximation process in the pre-accession countries.
Date: 2021-09-01
Institutions: Joint Research Centre
Subjects: Albania, Bosnia and Herzegovina, European Union, Kosovo, Montenegro, North Macedonia, Serbia, Türkiye, Western Balkans, common agricultural policy, competitiveness, economic policy, farming sector, macroeconomics, pre-accession strategy, research report, rural region

Recent agricultural policy developments in 
the  context  of  the  EU  approximation 
process in the pre-accession countries 

Authors:  Aleksandra  Martinovska  Stojcheska,  Ana  Kotevska,  Ivana 
Janeska  Stamenkovska,  Dragi  Dimitrievski,  Edvin  Zhllima,  Željko 
Vaško,  Sabahudin  Bajramović,  Mihone  Kerolli  Mustafa,  Mirsad 
Spahić,  Vlado  Kovačević,  Ahmet  Ali  Koç,  Ahmet  Bayaner,  Pavel 
Ciaian 

Editors:  Aleksandra  Martinovska  Stojcheska,  Ana  Kotevska,  Pavel 
Ciaian, Boban Ilic, Dori Pavloska-Gjorgjieska, Guna Salputra 

2021 
2021 

EUR 30687 EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
This publication is a technical report by the Joint Research Centre (JRC), the European Commission’s science and knowledge service. It aims 
to provide evidence-based scientific support to the European policymaking process. The scientific output expressed does not imply a policy 
position of the European Commission. Neither the European Commission nor any person acting on behalf of the Commission is responsible 
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the EU concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or 
boundaries. 

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Email: JRC-D4-SECRETARIAT@ec.europa.eu 
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JRC124502 

EUR 30687 EN 

PDF 

ISBN 978-92-76-37270-7 

ISSN 1831-9424 

doi:10.2760/041338 

Luxembourg: Publications Office of the European Union, 2021 

© European Union, 2021 

The reuse policy of the European Commission is implemented by the Commission Decision 2011/833/EU of 12 December 2011 on the reuse 
of Commission documents (OJ L 330, 14.12.2011, p. 39). Except where otherwise noted, the reuse of this document is authorised under the 
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All content © European Union, 2021, except bottom cover picture: rural landscape in Bosnia and Herzegovina © G. Salputra, 2018 and SWG 
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How to cite this report: Martinovska Stojcheska, A., Kotevska, A., Janeska Stamenkovska, I., Dimitrievski, D., Zhllima, E., Vaško, Ž., Bajramović, 
S., Kerolli Mustafa, M., Spahić, M., Kovačević, V., Koç, A.A., Bayaner, A., Ciaian P., Recent agricultural policy developments in the context of 
the EU approximation process in the pre-accession countries, Martinovska Stojcheska, A., Kotevska, A., Ciaian, P., Ilic, B., Pavloska-Gjorgjieska, 
D.,  Salputra  G.,  eds.,  EUR  30687  EN,  Publications  Office  of  the  European  Union,  Luxembourg,  2021,  ISBN  978-92-76-37270-7, 
doi:10.2760/041338, JRC124502. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contents 

1.  CROSS-COUNTRY SYNTHESIS: RECENT AGRICULTURAL POLICY DEVELOPMENTS IN THE CONTEXT OF THE 
EU APPROXIMATION PROCESS IN PRE-ACCESSION COUNTRIES ........................................................................ 6 

1.2. 

1.1. 

1.3. 
1.4. 

INTRODUCTION ............................................................................................................................................ 6 
Background and aim ....................................................................................................................................... 6 
Method, data and conceptual framework ...................................................................................................... 6 
SITUATION AND TRENDS IN THE AGRICULTURAL SECTOR IN THE WESTERN BALKANS AND TURKEY – CONTEXT AND SETTING 8 
Macroeconomic context .................................................................................................................................. 8 
Agriculture as an important economic sector for the WBs and Turkey ......................................................... 10 
RURAL DEVELOPMENT STATISTICS IN THE WESTERN BALKANS AND TURKEY ............................................................ 15 
AGRICULTURAL POLICY IN THE WESTERN BALKANS AND TURKEY .......................................................................... 17 
State of harmonisation of agricultural policies with EU requirements ......................................................... 17 
Principle 1: Strategic policy framework ......................................................................................................... 18 
Principle 2: Size and allocation of financial resources ................................................................................... 20 
Principle 3: Direct producer support .............................................................................................................. 25 
Principle 4: Measures to improve competitiveness ....................................................................................... 25 
Principle 5: Policies for sustainability and public goods provision by the farming sector ............................. 26 
Principle 6: Quality of life and employment in rural areas ............................................................................ 27 
CONCLUSIONS AND RECOMMENDATIONS ........................................................................................................ 28 
1.5. 
REFERENCES .......................................................................................................................................................... 30 

2.  CASE STUDY: ALBANIA ............................................................................................................................ 32 

INTRODUCTION .......................................................................................................................................... 32 
2.1. 
STATE OF THE AGRI-FOOD SECTOR ................................................................................................................. 32 
2.2. 
2.3. 
SOCIOECONOMIC ISSUES UNDERLYING RURAL AREAS .......................................................................................... 35 
2.4.  NATIONAL POLICY FRAMEWORK .................................................................................................................... 37 
EU APPROXIMATION PROCESS ....................................................................................................................... 42 
2.5. 
2.6. 
DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS ....................................................................................... 43 
REFERENCES .......................................................................................................................................................... 44 

3.  CASE STUDY: BOSNIA AND HERZEGOVINA .............................................................................................. 46 

INTRODUCTION .......................................................................................................................................... 46 
3.1. 
STATE OF THE AGRI-FOOD SECTOR ................................................................................................................. 46 
3.2. 
3.3. 
SOCIOECONOMIC ISSUES UNDERLYING RURAL AREAS .......................................................................................... 52 
3.4.  NATIONAL POLICY FRAMEWORK .................................................................................................................... 54 
Republic of Srpska ......................................................................................................................................... 54 
Federation of Bosnia and Herzegovina ......................................................................................................... 55 
Brčko District of Bosnia and Herzegovina ..................................................................................................... 55 
3.5.  MEASURES AND BUDGETARY SUPPORT FOR AGRICULTURE AND RURAL DEVELOPMENT .............................................. 55 
Direct producer support measures ................................................................................................................ 56 
Structural and rural development measures ................................................................................................. 58 
EU APPROXIMATION PROCESS ....................................................................................................................... 60 
3.6. 
3.7. 
DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS ....................................................................................... 62 
REFERENCES .......................................................................................................................................................... 63 

4.  CASE STUDY: KOSOVO* .......................................................................................................................... 65 

INTRODUCTION .......................................................................................................................................... 65 
4.1. 
STATE OF THE AGRI-FOOD SECTOR ................................................................................................................. 65 
4.2. 
4.3. 
SOCIOECONOMIC ISSUES UNDERLYING RURAL AREAS .......................................................................................... 67 
4.4.  NATIONAL POLICY FRAMEWORK .................................................................................................................... 68 
4.5.  MEASURES AND BUDGETARY SUPPORT FOR AGRICULTURE AND RURAL DEVELOPMENT .............................................. 69 
EU APPROXIMATION PROCESS ....................................................................................................................... 72 
4.6. 
4.7. 
DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS ....................................................................................... 73 
REFERENCES .......................................................................................................................................................... 74 

i 

 
5.  CASE STUDY: MONTENEGRO .................................................................................................................. 75 

5.1. 
5.2. 

INTRODUCTION .......................................................................................................................................... 75 
STATE OF THE AGRI-FOOD SECTOR ................................................................................................................. 75 
Socioeconomic issues underlying rural areas ................................................................................................ 77 
5.3.  NATIONAL POLICY FRAMEWORK .................................................................................................................... 78 
5.4.  MEASURES AND BUDGETARY SUPPORT FOR AGRICULTURE AND RURAL DEVELOPMENT .............................................. 79 
EU APPROXIMATION PROCESS ....................................................................................................................... 83 
5.5. 
5.6. 
DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS ....................................................................................... 84 
REFERENCES .......................................................................................................................................................... 85 

6.  CASE STUDY: NORTH MACEDONIA ......................................................................................................... 86 

INTRODUCTION .......................................................................................................................................... 86 
6.1. 
STATE OF THE AGRI-FOOD SECTOR ................................................................................................................. 86 
6.2. 
6.3. 
SOCIOECONOMIC ISSUES UNDERLYING RURAL AREAS .......................................................................................... 91 
6.4.  NATIONAL POLICY FRAMEWORK .................................................................................................................... 93 
6.5.  MEASURES AND BUDGETARY SUPPORT FOR AGRICULTURE AND RURAL DEVELOPMENT .............................................. 94 
Programmed budgetary support ................................................................................................................... 94 
Budgetary transfers ....................................................................................................................................... 96 
EU APPROXIMATION PROCESS ..................................................................................................................... 100 
6.6. 
6.7. 
CONCLUSIONS AND RECOMMENDATIONS ...................................................................................................... 101 
REFERENCES ........................................................................................................................................................ 103 

7.  CASE STUDY: SERBIA ............................................................................................................................. 105 

INTRODUCTION ........................................................................................................................................ 105 
7.1. 
STATE OF THE AGRI-FOOD SECTOR ............................................................................................................... 105 
7.2. 
7.3. 
SOCIOECONOMIC ISSUES UNDERLYING RURAL AREAS ........................................................................................ 107 
7.4.  NATIONAL POLICY FRAMEWORK .................................................................................................................. 108 
7.5.  MEASURES AND BUDGETARY SUPPORT FOR AGRICULTURE AND RURAL DEVELOPMENT ............................................ 110 
EU APPROXIMATION PROCESS ..................................................................................................................... 113 
7.6. 
DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS ..................................................................................... 113 
7.7. 
Policy recommendations ............................................................................................................................. 114 
REFERENCES ........................................................................................................................................................ 117 

8.  CASE STUDY: TURKEY ............................................................................................................................ 118 

8.1. 
8.2. 
8.3. 

INTRODUCTION ........................................................................................................................................ 118 
STATE OF THE AGRI-FOOD SECTOR ............................................................................................................... 118 
SOCIOECONOMIC ISSUES UNDERLYING RURAL AREAS ........................................................................................ 120 
National policy framework .......................................................................................................................... 121 
8.4.  MEASURES AND BUDGETARY SUPPORT FOR AGRICULTURE AND RURAL DEVELOPMENT ............................................ 123 
EU APPROXIMATION PROCESS ..................................................................................................................... 125 
8.5. 
Discussion, conclusions and recommendations .......................................................................................... 126 
REFERENCES ........................................................................................................................................................ 127 

LIST OF ABBREVIATIONS ............................................................................................................................... 129 

LIST OF FIGURES ........................................................................................................................................... 131 

LIST OF TABLES ............................................................................................................................................. 133 

ii 

 
 
 
 
Foreword and acknowledgements 

The  EU  approximation  remains  one  of  the  main  economic  and  political  projects  for  the  Western  Balkan  (WB) 
countries/territories and Turkey. The changing policy framework may have wide-ranging impacts for the development 
of the overall economy in general and the farming sector in particular. Along with the national schemes resulting from 
country-specific policy designs and budgetary transfers, the EU has developed an instrument to ease the transition 
process of the WBs and Turkey in their preparations for accession to the EU – namely the instrument for pre-accession 
assistance  (IPA).  Most  of  the  assistance  for  agriculture  and  rural  development  in  pre-accession  countries  is 
implemented through the multiannual IPA for rural development (IPARD) programmes. 

In this context, the changing policy environment in the WB countries/territories and Turkey requires the development 
of approaches for agricultural data collection and analysis to shed light on the potential impacts of the adopted policies 
on the farming sector and the approximation of the EU acquis in the area of agriculture and rural development. This 
allows a better understanding to be gained of the effectiveness and efficiency of the policies adopted and thus provides 
a  scientific  basis  for  policymaking.  Gaining a  more  comprehensive  understanding of  the  effects  of  individual  policy 
measures on the development of the agricultural sector allows better targeting of both national support schemes and 
IPARD programmes. 

Over recent years, the Joint Research Centre (JRC) and the Directorate-General for Agriculture and Rural Development 
of the European Commission have initiated a number of research activities focusing on an economic analysis of the 
agricultural sector in the EU and selected non-EU countries and their associated agricultural policies. JRC financed the 
monitoring of agricultural policy developments in the WB countries/territories in the period before 2019, publishing 
reports on three studies: Analysis of the agricultural and rural development policies of the Western Balkan countries (1), 
Monitoring  of  agricultural  policy  developments  in  the  Western  Balkan  countries (2)  and  Agricultural  policy 
developments  and  EU  approximation  process  in  the  Western  Balkan  countries (3).  The  Regional  Rural  Development 
Standing Working Group (SWG) was involved in the implementation of each of these studies. The main achievements 
of these studies (summarised) are the following: 

 

 

 
 

 
 

 

regular updates were carried out regarding the agricultural policy developments in the pre-accession 
countries; 
a  comprehensive dataset  was produced about  the agricultural policy budgetary transfers in the pre-
accession countries as a tool for monitoring policy developments and benchmarking; 
a statistical dataset on agriculture in the pre-accession countries was produced; 
an analysis was undertaken of the availability and quality of farm accountancy data network data in the 
WB countries/territories; 
policy recommendations were given for the relevant ministries of the pre-accession countries; 
the  agricultural  policy  network  and  cooperation  in  the  pre-accession  countries  were  strengthened, 
including both agricultural economists and ministerial representatives from the region; 
the agricultural policy plus web platform was created and maintained. 

The  current  report  presents  the  results  of  the  project  ‘Study  on  the  research,  innovation  and  technology  transfer 
capacities and on the recent agricultural policy developments in the context of the EU approximation process in the pre-
accession countries’. This study is a follow-up to previous research efforts aiming to analyse recent agricultural policy 
developments in the pre-accession countries and to assess the state of harmonisation with the Common Agricultural 
Policy in these countries. 

On this occasion, JRC and the SWG would like to thank all participating ministries of agriculture and rural development 
from the south-eastern European region and all of the experts involved for their valuable contributions, as well as the 
Association of Agricultural Economists of North Macedonia for the scientific coordination of this study. We would like 
to gratefully acknowledge Liam Breslin, Marius Lazdinis and Zigo Rutkovskis (Directorate-General for Agriculture and 
Rural Development) for the support they provided throughout the implementation of the study and for their valuable 
feedback on the results. 

On behalf of JRC   

Mr Giampiero Genovese 
Head of Unit 

On behalf of SWG 

Mr Boban Ilic 
Secretary General 

(1)  http://seerural.org/wp-content/uploads/2016/08/JRC-Technical-Report-2016_Analysis-of-the-agricultural-and-rural-development-

policies-of-the-Western-Balkan-countries.pdf 

(2)  http://seerural.org/wp-content/uploads/2017/06/Monitoring-of-agricultural-policy-developments-in-the-Western-Balkan-

countries.pdf  

(3)  http://seerural.org/wp-content/uploads/2019/03/Agricultural-policy-developments.pdf  

3 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                           
Authors 

Aleksandra Martinovska Stojcheska (1), Ana Kotevska (1), Ivana Janeska Stamenkovska (1), Dragi Dimitrievski (1), 
Edvin Zhllima (2), Željko Vaško (3), Sabahudin Bajramović (4), Mihone Kerolli Mustafa (5), Mirsad Spahić (6), Vlado 
Kovačević (7), Ahmet Ali Koç (8), Ahmet Bayaner (8), Pavel Ciaian (9) 

Editors: 
Aleksandra  Martinovska  Stojcheska (1),  Ana  Kotevska (1),  Pavel  Ciaian (9),  Boban  Ilic (10),  Dori  Pavloska-
Gjorgjieska (10), Guna Salputra (9) 

(1) 

(2) 
(3) 
(4) 
(5) 
(6) 

(7) 
(8) 
(9) 
(10) 

Association of Agricultural Economists of North Macedonia/Ss. Cyril and Methodius University in Skopje, 
Faculty of Agricultural Sciences and Food, Skopje, North Macedonia 
Faculty of Economics Economics and Agribusiness, Agricultural University of Tirana, Tirana, Albania 
Faculty of Agriculture, University of Banja Luka, Banja Luka, Bosnia and Herzegovina 
Faculty of Agriculture and Food Sciences, University of Sarajevo, Sarajevo, Bosnia and Herzegovina 
International Business College Mitrovica, Mitrovica, Kosovo* 
Department  of  Economic  Analysis  and  Market,  Ministry  of  Agriculture  and  Rural  Development, 
Podgorica, Montenegro 
Institute of Agricultural Economics, Belgrade, Serbia 
Faculty of Economics and Administrative Sciences, Akdeniz University, Antalya, Turkey 
Joint Research Centre (JRC), European Commission, Seville, Spain 
Regional Rural Development Standing Working Group (SWG), Head Office/Secretariat in Skopje, North 
Macedonia  

(*)  This designation is without prejudice to positions on status, and is in line with UNSCR 1244 and the ICJ Opinion on the Kosovo declaration 

of independence. 

4 

 
 
 
 
 
                                           
Summary 

The aim of this report is to analyse recent agricultural policy developments in the countries/territories of the 
Western Balkans (WBs) and Turkey and their state of harmonisation with the Common Agricultural Policy (CAP) 
of the EU. The report provides both comparative cross-country analyses and a more detailed assessment in the 
form of country case studies. The report builds on the series of previous work undertaken on a similar issue by 
providing an update on the recent agricultural policy developments in the region. That is, the report covers the 
period from 2017 to 2019 in detail, with reference made to changes that took place in the previous decade. The 
comparative cross-country analyses carried out in this report follow the conceptual framework that defines the 
key harmonisation principles required to align the agricultural policies of the WBs and Turkey with the EU’s CAP. 
A quantitative analysis of agricultural policy developments was performed using data on budgetary support for 
agriculture,  systematised  according  to  the  unified  statistical  databases  and  the  Agricultural  Policy  Measures 
Classification  (APMC)  tool,  a  uniform  classification  scheme  of  agricultural  budgetary  support  enabling  a 
comparison of the scope and structure of budgetary support for agriculture between the WBs and Turkey and 
the EU. 

The alignment of the agricultural policies of the WBs and Turkey with the EU’s CAP is rather heterogeneous across 
countries/territories.  Overall,  the  agricultural  policies  of  the  WBs  and  Turkey  are  more  in  line  in  terms  of 
commitment  and  future  planning  than  in  terms  of  the  policy  measures  actually  implemented.  The  WB 
countries/territories and Turkey adopted, to a large extent, the sustainability model in their medium- and long-
term strategic planning for future agricultural policies by aiming to promote economic, environmental and social 
objectives  in  the  agricultural  sector  and  rural  regions.  However,  when  it  comes  to  the  implementation  of 
measures, support is mainly production oriented and has a sectorial focus. 

Overall, in recent years, agricultural support has increased in the WB countries/territories, but there has been a 
notable decrease in Turkey. Regarding the structure of agricultural support, market and direct support measures 
(first pillar) dominate the support measures in almost all countries/territories, followed by structural and rural 
development  support  (second  pillar),  while  only  a  small  proportion  of  the  total  support  is  allocated  to  other 
agricultural support (third pillar) in all countries/territories. A key difference in the agricultural policies of the 
WBs and Turkey and of the EU’s CAP is the type of measures implemented. First, the WBs and Turkey allocate 
first pillar support primarily through coupled direct support, whereas in the EU the main type of direct support 
is  decoupled  payments.  A  second  important  difference  between  the  WBs  and  Turkey  and  the  EU’s  CAP  is  in 
second  pillar  support.  In  all  of  the  WBs  and  Turkey,  this  support  is  almost  entirely  targeted  at  improving 
competitiveness within the agri-food sector, whereas less support tends to be allocated to promoting quality of 
life and employment in rural areas and, in particular, to promoting the delivery of environmental and agricultural 
public goods. In the EU, the reverse situation holds. A major challenge, related to the alignment of the agricultural 
policies  of  the  WBs  and  Turkey  with  the  EU,  which  still  remains  unsolved  in  the  region,  is  linked  to  capacity 
building and the institutional set-up in the public administration responsible for  managing and implementing 
agricultural support. In addition, in the WBs and Turkey, the development of a strategic policy framework with 
respect to monitoring and analytical capabilities has been insufficient to ensure that, upon eventual accession, 
they are able to implement  the CAP policy cycle, consisting of, among other things, planning, evaluation and 
contributions to the formulation of an effective support system. 

Key  words:  agricultural  policy,  Agricultural  Policy  Measures  Classification,  Western  Balkans,  Turkey,  CAP,  EU 
accession. 

5 

 
 
 
1.  CROSS-COUNTRY SYNTHESIS: RECENT AGRICULTURAL POLICY 

DEVELOPMENTS IN THE CONTEXT OF THE EU APPROXIMATION PROCESS IN 
PRE-ACCESSION COUNTRIES 

Aleksandra Martinovska Stojcheska, Ana Kotevska, Ivana Janeska Stamenkovska, Dragi Dimitrievski (4) and Pavel 
Ciaian (5) 

1.1. 

Introduction 

Background and aim 

Joining the EU is a key strategical priority for the countries/territories in the Western Balkans (WBs) and Turkey. 
One  of  these  countries’  objectives  is  to  prepare  their  agricultural  sectors  to  enter  the  EU  and,  accordingly, 
harmonise their policies with the EU’s Common Agricultural Policy (CAP). 

The overall objective of this report is to provide country case studies and a cross-country analytical overview of 
agricultural policy developments in the WBs and Turkey and to analyse their state of harmonisation with the EU’s 
CAP. Alongside Turkey, the WB countries/territories covered in the report are Albania, Bosnia and Herzegovina, 
Kosovo*, Montenegro, North Macedonia and Serbia. 

This  report  presents  the  results  of  the  project  ‘Study  on  the  research,  innovation  and  technology  transfer 
capacities and on the recent agricultural policy developments in the context of the EU approximation process in 
the  pre-accession  countries’,  which  was  initiated  and  funded  by  the  Joint  Research  Centre  (JRC)  and  the 
Directorate-General for Agriculture and Rural Development of the European Commission and implemented by 
the  Regional  Rural  Development  Standing  Working  Group  (SWG).  This  report  builds  on  previous  studies  that 
aimed to establish regular analyses of agricultural policy development in the region (6), namely Analysis of the 
agricultural and rural development policies of the  Western Balkan countries (Volk  et al., 2016),  Monitoring of 
agricultural  policy  developments  in  the  Western  Balkan  countries  (Volk  et  al.,  2017)  and  Agricultural  policy 
developments and EU approximation process in the Western Balkan countries (Volk et al., 2019). As an update 
on the previous reports, the current report provides statistical and agricultural policy data and a policy analysis 
for the latest  available years  for the WB countries/territories (2017 to 2019) and a  statistical and policy data 
series for Turkey for the last 10 years. 

The report is structured into eight chapters. The first chapter provides a comparative cross-country analysis of 
the agricultural policy developments in the WB countries/territories and Turkey and their state of harmonisation 
with the EU CAP. Chapters 2 to 8 detail country case studies, describing recent developments of the agricultural 
policy in each pre-accession country. 

Method, data and conceptual framework 

The quantitative analyses carried out in this report were performed using two methodological tools/databases: 
(i) the Agricultural Policy Measures Classification (APMC) tool and (ii) the supplementary agricultural statistical 
dataset  (StatDatabase).  These  methodological  tools  build  on  and  extend  the  previous  work  of  Volk  (2010), 
Rednak et al. (2013), Volk et al. (2014), Volk et al. (2016, 2017, 2019) and Erjavec et al. (2021). Both databases 
cover  a  10-year  time  period  from  2010  to  2019,  with  the  current  study  adding  to  the available  research  the 
following periods: 2017–2019 for the WB countries/territories and the full 10-year period for Turkey. However, 
the focus of this report was principally the recent developments, namely those in the last three referenced years 
(2017 to 2019). 

Information for the databases was collected by national experts from the available national statistics, formal 
policy documents, research studies, reports and papers. In cases with no publicly accessible data on agricultural 
support,  other  relevant  sources  were  used,  such  as  governmental  budgetary  plans,  policy  programmes  and 

(4)  Association of Agricultural Economists of North Macedonia/Ss. Cyril and Methodius University in Skopje, Faculty of Agricultural Sciences 
ana.kotevska@fznh.ukim.edu.mk, 

amartinovska@fznh.ukim.edu.mk, 

Food, 

and 
Macedonia; 
ijaneska@fznh.ukim.edu.mk, ddragi@fznh.ukim.edu.mk 
Joint Research Centre (JRC), European Commission, Seville, Spain; pavel.ciaian@ec.europa.eu 

Skopje, 

North 

(5) 
(6)  The novelty of this report in terms of geographical coverage compared with previous work is that it includes Turkey alongside the WB 

countries/territories. 

6 

 
 
                                           
regulations, reports on the implementation of agricultural policy measures from various ministries and personal 
communications. 

StatDatabase is organised using a number of headings, covering various economic and agricultural aspects. To 
ensure  uniformity  across  the  information  collected,  predefined  templates  were  used  for  the  data  collection. 
StatDatabase was upgraded to cover additional socioeconomic and rural development issues, including data on 
organic  production (7).  Although  the  availability  of  agricultural  statistics  in  the  pre-accession  countries  is 
increasing  over  time,  in  some  countries/territories  important  data  are  still  missing.  For  example,  the  farm 
structure survey is not available in Albania, Bosnia and Herzegovina or Turkey, and was not updated in the last 
few years in the other countries/territories. Economic accounts for agriculture are missing in Albania, Bosnia and 
Herzegovina and Montenegro, and the Turkey dataset was compiled by the country expert for the purposes of 
this  project.  Price  indices  are  not  available  for  Albania  or  Montenegro.  Furthermore,  general  and  agriculture 
censuses  have  not  been  carried  out  recently  in  most  countries/territories;  therefore,  the  official  population 
estimations from statistical offices are used instead. 

The  APMC  tool  provides  a  harmonised  and  consistent  database  of  individual  policy  instruments  for  the  WB 
countries/territories  and  Turkey  (Rednak  and  Volk,  2018).  The  APMC  database  contains  data  on  realised 
budgetary transfers to agriculture, classified by the EU two-pillar concept and the Organisation for Economic Co-
operation and Development’s (OECD) producer support estimate (PSE) concept (OECD, 2016a). This tool allows 
uniform classification of the different policy measures among countries/territories and a comparison with the 
EU’s CAP. The APMC tool integrates predefined layouts to prepare data for substantive and comparative analysis. 
The APMC is built on a hierarchical principle, which allows the analysis of agricultural policy instruments to be 
conducted at different levels of aggregation. At the first level, agricultural support is grouped into three main 
areas:  (i)  market  and  direct  producer  support  measures  (first  pillar),  (ii)  structural  and  rural  development 
measures (second pillar) and (iii) other measures related to agriculture (third pillar). Each of these three broad 
types of support is then split further into specific submeasures (Volk et al., 2019). Thus, the broadest level of the 
APMC  analytical  presentation  provides  information  on  the  evolution  of  total  budgetary  support  related  to 
agriculture  over  time,  by  pillars  and  also  more  analytically,  namely  within  pillars  with  different  levels  of 
disaggregation. 

Using StatDatabase and the APMC, several indicators were derived and are compared throughout the report. 
The report also compares the performance of the WB countries/territories and Turkey relative to the EU, with 
the latter serving as a benchmark. Since the dataset does not extend beyond 2019, the EU averages are taken 
for  the  27  Member  States  and  the  United  Kingdom (8).  For  the  EU,  the  CAP  policy  context  and  performance 
indicators used in the report are from the European Commission (2020a). 

Alongside agricultural policy-related indicators, different agricultural performance indicators are analysed in the 
report, such as labour productivity (based on the gross value added (GVA), as a volume measure of the output, 
and the number of people employed, as a measure of the input use; Freeman, 2008). Agricultural orientation 
was also assessed by using the proportion of agricultural support based on gross domestic product (GDP), gross 
agricultural output and government spending. 

To gain a detailed understanding of the existing agricultural support in the WBs and Turkey, and subsequently 
their  approximation  status  with  the  CAP,  we  applied  a  conceptual  framework  that  defines  the  key  principles 
underlining the EU’s agricultural policy priorities. In this respect, the conceptual logic for assessing the accession 
and pre-accession agricultural policy harmonisation process is built along the following six key principles (Erjavec 
et al., 2021; Figure 1): (P1) the strategic policy framework, (P2) the size and allocation of financial resources, (P3) 
direct producer support, (P4) measures to improve competitiveness, (P5) policies for sustainability and public 
goods provision by the farming sector and (P6) quality of life and employment in rural areas. These six principles 
align with the priorities set by the EU’s CAP, in terms of their broad categories, which can be adapted to take into 
consideration any future CAP changes. Acceding countries’ agricultural policies must align with these principles 
for respective agricultural policies to become harmonised with the CAP. 

The conceptual framework allows a qualitative and quantitative assessment to be undertaken of the state and 
progress of the alignment of the national policies in view of the common goal of accession to the EU and joining 

(7)  The  statistical  databases,  including  a  summary  of  the  agricultural  budgetary  transfers,  are  available  on  the  SWG  web  portal 

(http://app.seerural.org/agricultural-statistics/). 

(8)  The United Kingdom is also included for the calculation of various EU-level indicators, because the periods both before and after the 

United Kingdom’s withdrawal from the EU are considered in the report. 

7 

 
                                           
the  CAP.  This  framework  also  enables  a  comparison  to  be  made  of  the  agricultural  policies  in  the  different 
countries/territories, as well as with the EU benchmark. 

This  chapter, on the cross-country analysis, is  structured as follows: after  this introduction, which  has briefly 
described the aims, data sources and method, Section 1.2 presents the state of the agricultural sector through 
some key macroeconomic, sectoral and trade indicators, with an additional focus on the socioeconomic issues 
underlying rural areas in the WBs and Turkey in Section 1.3. The agricultural policy framework and recent policy 
changes  are  presented  in  Section 1.4,  including  aspects  related  to  strategic  policy  planning,  financing  and 
budgetary  transfers  to  agriculture  and  rural  development.  That  section  discusses  the  approximation  of 
agricultural policies in the candidate countries with the EU CAP following the framework depicted in Figure 1. 
The chapter closes with the final section highlighting the main conclusions and recommendations. 

Figure 1. The principles underlying the EU CAP, which acts as a 
benchmark for agricultural policy in pre-accession countries 

structure 

The following chapters (Chapters 2 to 8) set 
out  the  individual  pre-accession  country 
case  studies,  prepared  by  the  national 
experts.  All  of  the  case  studies  follow  a 
similar 
and  methodology, 
supplemented  by  the  experts’  assessment 
of the country’s contextual background, the 
systematic  and  standardised  evaluation  of 
the  national  agricultural  statistics,  the 
socioeconomic 
rural 
areas, the analysis of agricultural and rural 
development 
the 
identification of the major policy changes in 
recent years and progress with regard to the 
EU policy approximation, as well as relevant 
conclusions and recommendations. 

issues  underlying 

documents, 

policy 

Source: Erjavec et al. (2021). 

1.2.  Situation and trends in the agricultural sector in the  Western Balkans and Turkey  – 

context and setting 

The  situation and trends analysis of the development of the macroeconomic situation and of the agricultural 
sector in the WB countries/territories and Turkey provided in this section is based on data from StatDatabase 
complemented with additional socioeconomic and rural development data extracted from various sources, such 
as Eurostat and CAP context indicators (European Commission, 2020b). The assessment of the developments 
over time was conducted primarily by comparing the change of average values of various indicators from 2010–
2012 to 2017–2019 (9). 

Macroeconomic context 

The  WB  countries/territories  and  Turkey  recorded  positive  economic  development  from  2010  to  2019.  From 
2017 to 2019, the GDP per capita ranged from EUR 3 746 in Kosovo* to EUR 7 202 in Montenegro and EUR 8 577 
in Turkey, compared with 31 505 in the EU (Table 1). The highest growth of GDP per capita from 2010–2012 to 
2017–2019  was  observed  in  Bosnia  and  Herzegovina  (+48 %).  A  similar  trend  is  seen  for  the  other 
countries/territories, with an increase in GDP per capita over this period varying between 30 and 40 %, with the 
exception of Turkey, where the GDP per capita grew by only around 2 % over the same period. In the EU, GDP 
per capita increased by around 23 %. Similarly, the output of the economy, measured by the GVA of all sectors, 
also  shows  an  increasing  trend  during  the  observed  period  for  all  countries/territories.  North  Macedonia 
achieved the highest growth (+45 %), followed by Kosovo* (+39 %), Albania and Montenegro (+37 %), Bosnia and 

(9)  As indicated above, the United Kingdom is also included for the calculation of the EU indicators because the periods both before and 

after the United Kingdom’s withdrawal from the EU are covered. 

8 

 
                                           
Herzegovina (+36 %), Serbia (+25 %) and Turkey (+14 %). The EU shows a similar trend with an increase of 21 % 
in the GVA of all activities since the early 2010s (Table 1). 

While the total employment in the EU fell by about 4 %, it increased in almost all of the WB countries/territories 
and Turkey, except for Bosnia and Herzegovina, where the figures remained stable from 2010–2012 to 2017–
2019. Subsequently, unemployment rates markedly dropped in all of the WB countries/territories, although the 
unemployment rate still remains relatively high, ranging from 12.5 % in Albania to 29 % in Kosovo*. In contrast, 
unemployment in Turkey has increased by 24 % since 2010–2012, reaching 11.9 % in recent years (Table 1). 

food,  beverages  and  tobacco  varied  among 
The  proportion  of  total  household  expenditure  on 
countries/territories in 2017–2019, from 25 % in Turkey to 44 % in Kosovo* (the EU benchmark being 16.1 %), 
indicating  relatively  low  disposable  income  in  these  countries/territories,  as  expenditure  on  food  items 
constitutes  an  important  portion  of  the  household  budget.  As  in  the  EU  (+7 %),  over  the  last  decade,  the 
proportion of household expenditure taken up by food, beverages and tobacco has increased in Albania (+6 %), 
North Macedonia (+7 %), Bosnia and Herzegovina (+10 %) and Kosovo* (+12 %), while a significant reduction is 
seen in Montenegro (–19 %) and no significant change is seen in Serbia or Turkey (Table 1). 

A relatively high proportion of the population is at risk of poverty in the WB countries/territories and Turkey. 
Almost one quarter of the population in these countries/territories was confronted with the risk of poverty or 
social exclusion, which is somewhat higher than the EU level (Table 1). 

9 

 
Table 1. Socioeconomic context indicators 

Indicator 

Period 

AL 

BA 

XK 

ME 

MK 

RS 

TR 

EU 

Population 
(thousand 
inhabitants) 

Density 
(inhabitants/km
2) 

GDP per capita 
(EUR) 

GVA of all 
activities 
(million EUR) 

Total 
employment 
(thousand 
persons) 

Unemployment 
rate (%) 

Proportion of 
food, beverages 
and tobacco in 
total household 
expenditure (%) 

At risk of 
poverty (%) 

:, no data available. 

2017–2019 

2 865 

3 434 

1 801 

622 

2 076 

6 989 

81 900 

513 669 

2017–2019 

99.6 

67.1 

165.2 

45.0 

80.7 

90.2 

104.5 

117.9 

2010–2012 

3 193 

3 370 

2 650 

5 145 

3 601 

4 633 

8 377 

25 710 

2017–2019 

4 425 

4 983 

3 746 

7 202 

5 151 

6 104 

8 577 

31 505 

Index  2017–
2019/2010–
2012 (%) 

138.6 

147.9 

141.3 

140.0 

143.0 

131.7 

102.4 

122.5 

2010–2012 

8 057 

10 586 

3 933 

2 670 

6 395  28 229 

551 845 

11 828 407 

2017–2019 

11 073 

14 415 

5 448 

3 668 

9 295  35 379 

627 937 

14 251 629 

Index  2017–
2019/2010–
2012 (%) 

137.4 

136.2 

138.5 

137.3 

145.4 

125.3 

113.8 

120.5 

2010–2012 

929 

824 

303 

164 

644 

2 293 

23 020 

225 112 

2017–2019 

1 230 

823 

353 

237 

766 

2 814 

28 335 

217 340 

Index  2017–
2019/2010–
2012 (%) 

132.4 

99.8 

116.6 

144.6 

118.8 

122.7 

123.1 

96.5 

2010–2012 

13.4 

27.6 

39.9 

19.7 

31.5 

22.0 

9.6 

2017–2019 

12.5  

18.2  

29.0  

15.5  

20.1  

13.1  

11.9  

9.9 

6.9  

Index  2017–
2019/2010–
2012 (%) 

93.2  

65.9  

72.7  

78.5  

63.9  

59.5  

124.1  

69.7  

2010–2012 

38.9  

37.0  

39.3  

36.7  

37.3  

29.7  

25.0  

15.0  

2017–2019 

41.2  

40.8  

44.0  

29.7  

39.9  

29.5  

24.5  

16.1  

Index  2017–
2019/2010–
2012 (%) 

106.0  

110.4  

111.9  

80.9  

106.9  

99.4  

98.0  

107.0  

2017–2019 

23.6  

:  

:  

23.7  

22.1  

 25.2  

23.5  

17.0  

Source: WB&TR StatDatabases, Eurostat (2020), CAP context indicators (European Commission, 2020b). 

Agriculture as an important economic sector for the WBs and Turkey 

Agriculture remains an important economic sector for all of the WB countries/territories and Turkey. The GVA 
generated  from  agriculture,  forestry  and  fisheries  showed  notable  growth  in  almost  all  countries/territories, 
except for Kosovo* and Turkey, where its value dropped by 12 % and 18 %, respectively, in 2017–2019 compared 

10 

 
with 2010–2012. On the other hand, as national economies are growing, the proportion of agricultural value 
added in each country’s total GVA has considerably decreased in the WBs and Turkey and, as expected, this trend 
is stronger than in the EU. The decrease in the proportion that agricultural GVA makes up of the country’s total 
GVA is most pronounced in Kosovo* and Turkey, followed by North Macedonia, Montenegro and Serbia. Albania 
is the only country where the proportion of agricultural GVA out of that for all  activities remains relatively flat 
(Table 2). 

Table 2. Sectoral indicators – gross agricultural output and employment 

Indicator 

Period 

AL 

BA 

XK 

ME 

MK 

RS 

TR 

EU 

2010–2012 

1 700 

871 

610 

247 

705 

2 296 

51 629 

200 765 

of 

2017–2019 

2 368 

985 

538 

304 

899 

2 635 

42 530 

235 425 

GVA 
agriculture 
(million EUR) 

Proportion  of 
agricultural 
GVA out of GVA 
of  all  activities 
(%) 

Employment in 
agriculture and 
forestry 
(thousand 
persons) 

Proportion of 
those 
employed in 
agriculture and 
forestry out of 
total 
employment 
(%) 

:, no data available. 

Index 2017–
2019/2010–2012 
(%) 

139.3 

113.1 

88.1 

123.3 

127.5 

114.8 

82.4 

117.3 

2010–2012 

21.1 

8.2 

15.5 

9.2 

11.0 

8.1 

2017–2019 

21.4 

6.8 

9.9 

8.3 

9.7 

7.4 

9.5 

6.6 

1.7 

1.7 

Index 2017–
2019/2010–2012 
(%) 

101.5 

83.2 

63.7 

89.8 

87.4 

91.6 

69.6 

97.4 

2010–2012 

508.3 

164.3 

2017–2019 

459.1 

144.1 

Index 2017–
2019/2010–2012 
(%) 

90.3 

87.7 

2010–2012 

54.8 

19.9 

2017–2019 

37.3 

17.5 

: 

: 

: 

: 

: 

11.7 

118.3 

492.7 

5 265.6 

9 821.3 

18.5 

116.9 

461.7 

5 279.1 

8 375.4 

157.4 

98.8 

93.7 

100.3 

85.3 

5.8 

18.4 

21.5 

22.9 

7.7 

15.3 

16.2 

18.6 

4.4 

3.9 

Index 2017–
2019/2010–2012 
(%) 

68.1 

87.9 

: 

132.2 

83.3 

75.6 

81.4 

89.0 

Source: WB&TR StatDatabases, Eurostat (2020), CAP context indicators (European Commission, 2020b). 

The importance of the agricultural sector in the national economies of the WBs and Turkey is confirmed by the 
sizable  number  of  people  employed  in  the  sector.  Whereas  in  the  EU  only  3.9 %  of  people  are  engaged  in 
agriculture, in all of the WB countries/territories and Turkey, this proportion is significantly higher, ranging from 
7.7 % in Montenegro to 37.3 % in Albania, albeit with a decreasing trend over the years analysed in almost all of 
the  countries/territories.  This  reduction  is  most  evident  for  Albania  (–32 %)  and  Serbia  (–24 %)  (Table  2). 
Nevertheless, the high proportion of labour in agriculture vis-à-vis total employment, as compared with its GDP 
contribution (Figure 2), signals lagging sectoral productivity when compared with other sectors in the economy. 

The economic development in the region has been dynamic. For example, labour productivity levels, calculated 
as the total Gross Value Added per employed person, have slowly risen in almost all WB countries/territories in 
the last period (Figure 2). Exceptions are Montenegro and Turkey, where over the course of the last years, labour 
productivity experienced some setbacks. Still, labour productivity levels are far behind the rapid growth shown 
in  the  EU  average.  In  average  terms,  highest  values  of  the  aggregate  labour  productivity  in  2017–2019  are 
observed for Turkey (22.2 thousand EUR/person), followed by Bosnia and Herzegovina and Montenegro with 

11 

 
17.5 thousand EUR/person and 15.5 thousand EUR/person, respectively. The lowest total labour productivity is 
evidenced for Albania (9 thousand EUR/person) (Figure 2). 

Figure 2. Gross value of agriculture versus employment (left) and total labour and agricultural labour productivity (right) 

Note: ‘Ag. in total GVA’ refers to the proportion of agricultural GVA out of total GVA; labour productivity is measured as the total GVA per 
employed person; and ‘Ag. labour productivity’ refers to the GVA per employed person in agriculture. 

Source: WB&TR StatDatabases, Eurostat (2020), CAP context indicators (European Commission, 2020b). 

A  similar  development  is  observed  for  agricultural  labour  productivity,  with  an  increasing  trend  in  all 
countries/territories,  again  aside  from  Montenegro  and  Turkey.  Values  range  from  an  agricultural  GVA  of 
EUR 5 200 per person in Albania to EUR 8 1 per person in Turkey, with Montenegro set apart from the rest with 
a much higher value (an agricultural GVA of EUR 16 500 per employed person in agriculture), mainly because of 
the lower number of people employed in agriculture than in the other countries/territories (Figure 2). 

Regarding the productivity of key agricultural activities, wheat and milk yields in the WB countries/territories and 
Turkey fall far behind EU levels. In Montenegro, North Macedonia and Turkey, wheat yield ranges from 48 % to 
55 % of the EU average, while in Albania and Bosnia and Herzegovina  it is 65 % and 69 % of the EU average, 
respectively. The highest wheat yields are in Serbia, which has a wheat yield equal to 78 % of the EU average. 
Cow’s milk yields in all of the WB countries/territories and Turkey are less than half of the EU average, although 
they have increased in recent years, compared with the early 2010s; this trend is less evident for wheat yields 
(Figure 3). 

Figure 3. Average wheat yields (left) and milk yields (right) 

Notes: t, tonnes; ha, hectare. No data available for milk yields in Kosovo*. 

Source: WB&TR StatDatabases, Eurostat (2020). 

12 

 
 
Table 3 gives the average agricultural land by type for 2017–2019. Similar to the EU average, in Albania, Bosnia 
and Herzegovina, and Kosovo*, arable land takes around 50 % of total agricultural land, while this proportion is 
smaller for North Macedonia (33 %) and is only 3 % in Montenegro. Agricultural land in North Macedonia and 
especially in Montenegro consists mainly of permanent grassland and meadows. On the other hand, arable land 
makes up quite a high proportion of total agricultural land in Serbia (75 %) and Turkey (85 %). The area under 
organic  production,  although  slowly  increasing,  is  still  very  modest  in  all  of  the  WB  countries/territories  and 
Turkey, making up less than 1 % of the total agricultural area, and is significantly behind the EU average (7.5 %). 

Table 3. Sectoral indicators – agricultural land and yields (thousand hectares, 2017–2019) 

Indicator 

AL 

BA 

XK 

ME 

MK 

RS 

TR 

EU 

Agricultural land (total) 

1 190 

2 176 

417 

257 

1 265 

3 469 

23 207 

179 164 

Arable land  

607 

1 061 

188 

Permanent crops  

84 

106 

11 

7 

6 

418 

2 586 

19 763 

105 020 

41 

206 

3 443 

12 155 

Permanent grassland and meadows  

478 

1 080 

218 

242 

805 

656 

14 617 

61 434 

Other agricultural land 

Area under organic production* 

:, no data available; *, data for 2018. 

ha, hectares. 

: 

: 

: 

1.15 

: 

: 

0.1 

1 

: 

5 

554 

3.53 

4.87 

8.95 

229 

13 438 

Source: WB&TR StatDatabases, CAP context Indicators (European Commission, 2020b). 

The agri-food products trade has experienced growth in the WB countries/territories and Turkey over the last 
decade. Export value increased in 2017–2019 compared with 2010–2012 in all of the countries/territories, except 
in Montenegro, where a slight decrease in the agri-food exports of 7 % was observed. The highest growth was 
noted  for  Albania  and  Kosovo*,  where  the  export  of  agri-food  products  increased  remarkably  by  218 %  and 
166 %,  respectively,  over  the  period  analysed.  However,  although  absolute  values  of  agri-food  exports  are 
growing, in relative terms several WB countries/territories have experienced decreases in the share of agri-food 
exports out of total exports, most notably in North Macedonia (–36 %), Serbia (–22 %) and Montenegro (–10 %). 
Imports of agri-food products have also increased in all of the WBs and Turkey, but as a proportion of the total 
imports, a decreasing trend has been observed for most countries/territories, except for Serbia and Turkey (Table 
4). 

Most WB countries/territories are net importers of agri-food products, leading to a negative trade balance and 
an increasing trade gap over the period analysed for Albania, Bosnia and Herzegovina,  Kosovo*, Montenegro, 
and  North  Macedonia.  In  contrast,  Serbia  and  Turkey  are  net  exporters  of  agri-food  products  and  the  trade 
balance increased over the period from 2010 to 2019 (Table 4). 

13 

 
Table 4. Trade in food and agricultural products 

Indicator 

Period 

AL 

BA 

XK 

ME 

MK 

RS 

TR 

Exports  of  agri-
food 
products 
(million EUR) 

Proportion of agri-
food exports out of 
exports 
all 
of 
products (%) 

Proportion of agri-
products 
food 
(million EUR) 

Proportion of agri-
food  imports  out 
of  imports  of  all 
products (%) 

Trade  balance 
in 
agri-food  products 
(million EUR) 

2010–2012 

80.1 

307.8 

23.8 

51.8 

449.2 

1 929.3 

10 416.5 

2017–2019 

255.1 

475.3 

63.4 

48.2 

564.2 

2 973.7 

15 337.7 

2017–

Index 
2019/2010–
2012 (%) 

318.5 

154.4 

266.1 

93.0 

125.6 

154.1 

147.2 

2010–2012 

5.8 

7.8 

8.0 

13.7 

15.3 

23.4 

2017–2019 

11.1 

7.9 

18.2 

12.4 

9.8 

18.3 

10.4 

10.6 

2017–

Index 
2019/2010–
2012 (%) 

189.7 

101.0 

226.8 

90.3 

64.3 

77.9 

101.8 

2010–2012 

652.1 

1 363.9 

539.0 

429.6 

604.2 

1 031.0 

7 317.2 

2017–2019 

842.6 

1 619.6 

722.1 

543.1 

791.8 

1 731.0 

11 136.1 

2017–

Index 
2019/2010–
2012 (%) 

129.2 

118.7 

134.0 

126.4 

131.1 

167.9 

152.2 

2010–2012 

17.6 

18.0 

22.6 

24.5 

12.7 

2017–2019 

16.9 

16.4 

21.9 

22.0 

10.4 

7.4 

8.0 

4.4 

5.8 

2017–

Index 
2019/2010–
2012 (%) 

96.0 

91.1 

97.2 

89.5 

81.8 

107.3 

132.0 

2010–2012 

–572.0 

–1 056.1 

–515.1 

–377.7 

–155.0 

898.3 

3 099.3 

2017–2019 

–587.5 

–1 144.4 

–658.6 

–494.9 

–227.6 

1 219.1 

4 201.6 

2017–

Index 
2019/2010–
2012 (%) 

102.7 

108.4 

127.9 

131.0 

146.8 

135.7 

135.6 

2010–2012 

12.3 

22.6 

Export/import rate 

2017–2019 

30.2 

29.4 

4.5 

8.8 

12.0 

74.7 

189.3 

143.6 

8.9 

71.2 

171.8 

137.7 

2017–

Index 
2019/2010–
2012 (%) 

Source: WB&TR StatDatabases. 

246.4 

130.1 

197.1 

74.0 

95.3 

90.7 

95.9 

14 

 
 
Figure 4. Total trade and agri-food trade as a share of GDP 

140%

120%

100%

80%

60%

40%

20%

0%

125%

93%

89%

58%

54%

60%

48%

9%

12%

12%

13%

13%

11%

4%

AL

BA

XK

ME

MK

RS

TR

Total trade as a share of GDP (2010-2012)
Total trade as a share of GDP (2017-2019)
Agri-food trade as a share of GDP (2010-2012)

Source: WB&TR StatDatabases. 

Figure 4  presents  a  comparative  perspective 
referring to trade (for the total trade and agri-
food trade) as a proportion of a country’s GDP. 
In  this  context,  the  total  trade  (exports  and 
the 
imports)  significantly  contributes 
country’s  GDP  and,  with  the  exception  of 
its  proportion 
Kosovo*  and  Montenegro, 
significantly 
all 
increased 
countries/territories  in  2017–2019  compared 
with the early 2010s. 

to 

in 

in 

The  proportion  of  the  trade  of  agri-food 
products in the countries’ GDP is, as expected, 
smaller  than  the  total  trade.  It  is  on  a  similar 
the  WB 
level 
countries/territories,  varying 
in 
Albania  to  13 %  in  Montenegro  and  North 
Macedonia in 2017–2019. A smaller proportion 
is found for Turkey (4 % of GDP in 2017–2019). 

from  9 % 

almost 

all 

of 

1.3.  Rural development statistics in the Western Balkans and Turkey  

Although most of the countries/territories have made significant progress in the harmonisation of national and 
agricultural statistics with EU methodologies, the quality and availability of rural development statistics still lags 
behind. Most countries/territories do not have data available or do not disaggregate statistics for rural regions. 
This lack of data hinders the process of policy design, monitoring and evaluation, especially with regard to the 
rural development component. Without accurate and timely information on the state of the situation in rural 
regions, it is challenging to conceptualise, formulate, adopt, implement and, not least, evaluate and monitor the 
effectiveness of agricultural and rural development policies. 

As part of this report, rural development statistics were updated within StatDatabase to include certain variables 
related to rural population and labour force data. As reported in Table 5, there is a heterogeneous availability of 
data across variables and countries/territories and for many of them data are missing. 

Table 5. Assessment of rural areas’ data availability (2010–2019) 

Indicator 

Population in rural areas 

Population migrated from rural to urban areas 

Population migrated from urban to rural areas 

Population  active  and  non-active  in  the  labour  market  in 
rural areas (by education, age and gender) 

Activity rate of rural population 

+, available; +/–, partially available; –, not available. 

Source: WB&TR StatDatabases. 

AL 

+ 

+/– 

– 

– 

– 

BA 

XK 

– 

– 

– 

– 

– 

– 

– 

– 

+/– 

+/– 

ME 

+/– 

– 

– 

– 

– 

MK 

– 

+/– 

+/– 

+ 

+ 

RS 

+ 

+/– 

+/– 

+/– 

TR 

+/– 

– 

– 

+/– 

+/– 

+/– 

The  data  suggest  that,  in  Albania,  there  is  a  significant  demographic  change  taking  place,  with  the  urban 
population having been larger than the rural population since 2011. There is no official classification of the rural 
areas  in  Albania,  although  the  national  statistics  agency  defines  rural  areas  in  accordance  with  settlement 
patterns and population density. With regard to some socioeconomic aspects, the unfavourable infrastructure 
in rural areas, accompanied by the dysfunctional labour market and limited access to public services, contribute 
to the deterioration of these areas; for example, more people living in rural areas are at risk of poverty than in 
urban  regions.  Additionally,  the  GDP  per  capita  in  these  areas  is  20 %  lower  than  the  country  average.  The 
business environment in rural areas is also weak, and the majority of the rural population depends on agricultural 
activity for providing the main source of their income and employment. 

15 

 
 
 
In Bosnia and Herzegovina, there is also no official classification of the rural areas, and therefore statistical data 
are not divided according to the level of urbanisation in the country. For research purposes, the OECD criterion 
for  the  number  of  inhabitants  per  square  kilometre  is  often  used;  thus,  certain  territories  (states,  entities, 
cantons and municipalities) are divided into rural and urban parts (OECD, 2016b). For example, in accordance 
with recent  studies applying  the OECD  methodology  for the Republic of Srpska, only 5.4 % of the territory is 
classified as urban, while the remaining 94.6 % is a rural area with 41.3 % of the total population living there 
(Zubić et al., 2019). Based on the OECD methodology, out of 79 municipalities in Bosnia and Herzegovina, 56 are 
considered  as  rural  municipalities,  covering  85.1 %  of  the  territory  and  49.6 %  of  the  total  population 
(Muminović,  2013).  Using  the  2013  census  data  at  the  country  level,  rural  areas  cover  91.94 %  of  the  total 
territory  and  67.05 %  of  the  total  population.  However,  as  in  the  other  countries,  Bosnia  and  Herzegovina  is 
facing intensive depopulation of the rural areas, which significantly affects labour markets in these regions. 

Kosovo*  attempted  to  use  the  OECD  methodology  for  defining  rural  areas.  However,  it  was  not  a  relevant 
methodology because of the high population density in Kosovo*. As a result, the national statistics, on the basis 
of  the  2011  census,  classified  94.3 %  of  the  total  area  and  62 %  of  the  total  population  as  rural.  The 
unemployment  rate  in  these  areas  is  very  high  and  the  reliance  on  remittances  and  direct  or  indirect  donor 
support is more pronounced than in urban areas. For example, according to the EU labour force survey conducted 
in 2012, the unemployment rate in urban areas was 28.5 %, while in rural areas it was much higher, reaching 
40.1 %. 

In  Montenegro,  national  statistics  report  the  results  from  the  last  population  census,  conducted  in  2013, 
according  to  which  63.2 %  of  the  total  population  lives  in  urban  regions,  while  36.8 %  is  considered  a  rural 
population. This relatively high proportion of the population being classed as urban results from the intensified 
internal  migrations  in  the  country.  However,  in  accordance  with  the  OECD  classification  of  rural  areas,  the 
northern part of Montenegro, covering 13 municipalities, is made up predominantly of rural areas and is home 
to  59.7 %  of  the  total  population.  Additionally,  the  coastal  and  central  parts  of  Montenegro  are  classified  as 
intermediate regions, with 41.7 % and 20.4 % of the total population, respectively.  Thus, following the OECD 
methodology, almost the whole territory of Montenegro could be considered rural. 

North Macedonia has a national classification of rural areas, based on three characteristics: settlements located 
in  municipalities  established  within  rural  centres,  settlements  located  in  municipalities  in  urban  centres  with 
predominant systems for using agricultural and forest land, and cities with a population of fewer than  30 000 
people  with  possibilities  for  using  agricultural  and  forest  land.  With  this  definition,  rural  areas  cover  around 
88.7 % of the Macedonian territory and are home to 47.5 % of the total population. Many rural areas, especially 
small villages, are faced with strong outmigration, which has been especially true in recent years. Around 50 % 
of the rural population is active in rural labour markets, with higher employment rates (70 %) observed for the 
rural male population. The unemployment rate has decreased among the male population in recent years, while 
remaining almost unchanged for the female population. 

Serbia is also lacking a clear definition of rural areas. As a result, the rural regions in Serbia are represented by 
two  types  of  settlements  –  urban  and  others  –  which  has  been  shown  to  be  an  insufficient  classification. 
Furthermore, Serbia has not prepared a typology of its regions in accordance with the urban–rural typology of 
the  Directorate-General  for  Agriculture  and  Rural  Development.  Therefore,  many  rural  areas’  indicators  are 
missing, such as population, age structure, territory, employment rate and unemployment rate, as well as GDP 
per capita disaggregated by urban and rural regions. However, based on existing data in the country, the rural 
population  constitutes  around  39 %  of  the  total  population.  Like  in  other  countries/territories,  rural  areas  in 
Serbia face depopulation caused by migration to urban areas. 

National statistics in Turkey have defined rural areas based on the population and the administrative units. In 
this context, there are 4.3 million households in rural areas, constituting 21 % of total households in Turkey, with 
an  average household size of 4.8 persons. People older than 65 years make up the largest  proportion of the 
population in rural areas: their proportion of the rural population increased from 9.6 % in 2007 to 11.3 % in 2012. 
This ageing of rural areas is a result of the depopulation and increased internal migration in the country. 

An overall observation is that, in all pre-accession countries, basic infrastructure is in place in rural areas (roads, 
electricity, water supply and communications technology) that provides fundamental conditions, allows access 
to agricultural supplies and allows the marketing of products. Although the basic infrastructure is available in 
rural areas, in many areas it is of poor quality and is heterogeneously accessible to different rural population 
groups. Furthermore, progress is needed to improve the infrastructure in rural areas, not only in physical terms 
but also in social and environmental terms. Other area in which improvements are needed relate to the quality 

16 

 
of life in rural areas, in particular enhancing the diversification of on- and off-farm economic activities and the 
availability of job opportunities for the rural population. 

1.4.  Agricultural policy in the Western Balkans and Turkey 

Section 1.4.1  outlines  the  state  of  harmonisation  of  agricultural  policies  in  the  WBs  and  Turkey  with  the  EU 
requirements. The subsequent subsections present cross-country comparisons of the agricultural policies with 
the EU’s CAP following the predefined conceptual framework of the key harmonisation principles of agricultural 
policies as depicted in Figure 1 (Erjavec et al., 2021). The cross-country comparisons were carried out using the 
results from country case studies and data from APMC databases. 

State of harmonisation of agricultural policies with EU requirements 

Accession to the EU remains  an essential political goal for the WB countries/territories and Turkey, although 
different  countries/territories  are  at  various  stages  of  the  integration  process.  On  the  side  of  the  EU,  the 
Commission’s Western Balkans strategy (February 2018) acknowledged the renewed agenda for EU engagement 
with the region. Accession negotiations are under way with Turkey (since 2005, although they are currently at a 
standstill), Montenegro (since 2012) and Serbia (since 2014). As of March 2020, Albania and North Macedonia 
have moved a step forwards, with a decision to open the accession negotiations. Bosnia and Herzegovina and 
Kosovo* are potential candidate countries/territories. 

As  the  long-term  political  goal  of  the  WBs  and  Turkey  is  to  join  the  EU,  in  principle  the  CAP  represents  the 
benchmark that their agricultural policies must meet upon their accession. Owing to the economic and social 
importance of the agricultural sector in the pre-accession countries (e.g. given the relatively high proportion it 
makes up within the overall economy and employment) and structural factors (small-scale subsistence and semi-
subsistence farming), agriculture is one of the most complex and sensitive sectors in the enlargement process 
(European Commission, 2020c). The accession candidate countries need to develop the ability to take on the 
obligations of EU membership. Institutional reforms are therefore needed to align candidate countries with the 
legal administrative set-up and the support system of the EU, to facilitate integration of the agricultural sector 
into the EU single market and political decision-making process. This must ensure that, upon accession, candidate 
countries are able to implement the CAP policy cycle, which consists of planning, disbursing support payments, 
monitoring, evaluating and contributing to the formulation of the CAP support  system. Thus, during the pre-
accession period, candidate countries must gradually develop administrative structures that are comparable to 
the CAP (including food safety, veterinary and phytosanitary standards). They must also modify their agricultural 
policy measures to  enable a  shift  to  CAP-type support  upon accession.  The necessary  CAP  structures include 
administrative, financial, control and information structures, such as setting up paying agencies, an integrated 
administration and control system (IACS), a land parcel identification system (LPIS) and market mechanisms (e.g. 
marketing  standards  and  public  interventions).  Furthermore,  it  involves  putting  in  place  the  administrative 
capacity to monitor, evaluate and formulate support measures (European Commission, 2020c; Volk et al., 2019; 
Erjavec et al., 2021). 

Table 6 summarises the progress made in the accession negotiations on the agriculture and rural development 
chapter and the food safety, veterinary and phytosanitary policy chapter of the EU acquis based on the most 
recent information available (European Commission, 2020d). All of the countries/territories seem to still need to 
make significant progress to close the two chapters, although more progress is evident for food safety, veterinary 
and phytosanitary policy than for agriculture and rural development. Montenegro and North Macedonia appear 
to be the most advanced in both chapters. In the agriculture and rural development chapter, the progress is very 
heterogeneous across the countries/territories – it varies  from an early stage in Bosnia and Herzegovina  and 
some  level  of  preparation  (namely  in  Albania,  Kosovo*,  Serbia  and  Turkey)  to  moderate  preparation  in 
Montenegro and North Macedonia. 

17 

 
 
Table 6. Progress of the WB countries/territories and Turkey by acquis chapters in 2018 and 2019  

Acquis chapter 

11: Agriculture and rural development 

12: 
Food 
phytosanitary policy 

safety, 

veterinary 

and 

Albania 

Early stage (2018) 

Some 
preparation* 

level 

of 

Some level of preparation* 

Bosnia and Herzegovina 

Early stage 

Some level of preparation 

Kosovo* 

Some level of preparation 

Some level of preparation 

Montenegro 

Moderately prepared*** 

Moderately prepared*** 

North Macedonia 

Moderately prepared 

Good level of preparation* 

Serbia 

Turkey 

Some level of preparation** 

Moderately prepared** 

Some level of preparation**** 

Some level of preparation*** 

*, screening started; **, screening completed; ***, chapter opened; ****, chapter opened/frozen. 

Source: European Commission (2020d). 

Principle 1: Strategic policy framework 

The strategic policy framework principle addresses the policy management process or the policy cycle, starting 
from the strategic planning and the formulation of policy priorities until the implementation, monitoring and 
evaluation  of  policy  measures.  This  requires  that  countries/territories  have  in  place  reliable  administrative 
capacities, analytical support, monitoring systems and the use of adequate indicators to enable priority setting, 
and to run evidence-based policy planning of the policy intervention logic at the national level (Erjavec et al., 
2021). 

In  general,  all  countries/territories  have  a  clear  commitment  to  EU  integration;  thus,  most  of  them  have 
established  medium-  and  long-term  strategic  and  programming  documents,  which  set  future  goals  for 
agricultural and rural development policies, and most have largely aligned these documents with the EU CAP 
priorities. 

Strategic planning requires that the goals and priorities of the agricultural policy are set based on evidence-based 
policymaking and that their implementation is followed throughout the whole policy cycle. However, it is not the 
case that such a policy intervention model is always used and applied when defining strategic goals or during the 
policy implementation in the WBs and Turkey. For example, although the policy goals and priorities set in the 
medium- and long-term strategic documents largely match those of the CAP, the actual implementation of the 
agricultural policy does not always follow this approach. The policy measures actually implemented are mainly 
based on annual programmes and budgeting, which are not necessarily derived from the medium- and long-term 
strategic planning. Instead, they are largely influenced by the various  short- and medium-term domestic and 
political economic factors that prevail in a given year (Erjavec et al., 2021). 

Regarding policy monitoring and evaluation, the countries/territories have irregular and rather weak monitoring 
and evaluation systems in place. Although recently a few impact assessments were carried out, for instance in 
Albania and North Macedonia, it is not clear if the results from the monitoring and evaluation process and the 
impact assessment studies were used when developing strategic and programming documents or for improving 
policy implementation. Nevertheless, this indicates that there is a potential for using analytical support for policy 
formation and implementation. In addition, all countries/territories have established some form of institutional 
and administrative capacities for implementing their agricultural policy, especially for the  instrument for pre-
accession  assistance  for  rural  development  (IPARD)  programme.  Nevertheless,  there  is  a  need  for  additional 
capacity building to improve the exiting systems and to be able to respond to the changing policy environment 
(e.g. CAP reform, climate change challenges and the ongoing COVID-19 pandemic). 

18 

 
Overall, there is a potential for adopting strategic planning in all countries/territories, but at the same time it 
seems that there is a lack of clear understanding (including from policymakers) of the actual need for it, and of 
the  purpose  of  diligently  pursuing  each  step  in  the  policy  cycle.  Policies  are  being  designed,  prepared  and 
implemented, but, to a large extent, the intervention logic framework, as well as monitoring and policy impact 
analyses, are not systematically used. Some country-specific differences observed in the country case studies are 
presented  below,  where  the  current  situation  is  assessed  qualitatively  using  the  following  three-level  scale: 
initial, medium and advanced preparation stage. 

In Albania, one of the key weakness of the framework is the lack of a clear link between different documents 
outlining the strategic planning for and the implementation of the agricultural policy (e.g. between the inter-
sectoral  strategy  for  agriculture  and  rural  development  (ISARD)  for  2014–2020  and  the  agriculture  and  rural 
development  programme  fund  (ARDPF))  to  ensure  consistency  between  them.  The  main  shortcomings  are 
related  to  the  unclear  policy  priorities  and  objectives  set,  the  unclear  link  between  objectives  and  specific 
measures and the fact that implementation often departs from the  strategic priorities  and objectives stated. 
Although Albania has conducted some impact assessments (for more details, see  Chapter 2), the low level of 
administrative  capacity  constrains  the  use  of  such  results  for  policy  design  purposes  or  to  improve  the 
implementation of policy measures. This is reinforced by the slow progress made in establishing an IACS, a LPIS, 
an analytical support system or farm accountancy data network (FADN) data collection and, in  general, by the 
presence of weak information systems and statistics in agriculture. Overall, this indicates that Albania is still in 
the initial stages of establishing its strategic policy framework and needs to make more progress on the proper 
implementation of the policy cycle approach. 

Bosnia and Herzegovina has also adopted strategic documents with relevant objectives, but these are not strictly 
followed in practice neither in scope nor by structure. There is a weak monitoring and evaluation system in place 
in Bosnia and Herzegovina, which is carried out through ‘irregular, unsystematic and superficial’ analyses of the 
policies implemented (see Chapter 3). Some progress regarding the harmonisation of the monitoring and control 
system has been made in the phytosanitary and veterinary sectors. The differing views between the two entities 
–  the  Federation  of  Bosnia  and  Herzegovina  and  the  Republic  of  Srpska  –  also  delay  the  establishment  of  a 
common administrative structure and agency or agencies for the implementation of agricultural policies (e.g. the 
IPARD). Owing to these weaknesses, Bosnia and Herzegovina can be considered as being in the initial stages of 
establishing a strategic policy framework. 

Kosovo*  has  developed  a  number  of  strategic  documents  defining  the  priorities  of  its  agricultural  policy; 
however, as is the case in other WB countries, the implementation of the policy is not  fully  aligned with the 
priorities set. Administrative capacities, including monitoring and evaluation systems, are not  fully developed 
and utilised in the policy cycle, and there is lack of harmonisation of the legislation among sectors. According to 
the EU progress report on Kosovo*, limited progress has been made on the implementation of the agriculture 
and rural development programme, and there is a need to prioritise the improvement of policy monitoring and 
evaluation. Similar to other WB countries, progress has been made in adopting legislation on food safety and 
veterinary and phytosanitary issues (see  Chapter 4). Overall, Kosovo* is in the initial stages of establishing its 
strategic policy framework. 

As  with  most  of  the  WB  countries/territories,  strategic  planning  is  evident  in  Montenegro  only  through  the 
strategic documents it has prepared, while the implementation of the policy measures lags behind. Montenegro 
has  not  established  an  evidence-based  policy  system  for  assisting  in  the  design  and  implementation  of 
agricultural policy. Slow progress has also been made in establishing administrative capacities, such as setting up 
a functioning paying agency, an IACS and a FADN. This leads to the conclusion that the country does not have an 
appropriate basis for a system of analytical support for the policymaking process. Therefore, we might conclude 
that the country is in the initial stages of implementing the strategic planning framework. 

North Macedonia has developed strategic documents that define the priorities of its agricultural policies and 
these are aligned with the EU’s CAP. However, the country’s frequent modifications to the annual programmes 
raise doubts about the relevance of the strategic planning process, the consistency of the policies implemented 
as part of the strategic planning process and the focus of the policy. North Macedonia has largely established key 
administrative capacities to implement  its agricultural policy, with the IPARD contributing significantly to this 
process. However, the performance of these administrative capacities is constrained by the limited resources 
allocated relative to the needs. For example, although there was an increase in staff in the paying agency, the 
increasing  volume  of  national  and  IPARD  measures  means  that  some  measures  (e.g.  the  agri-environment, 
knowledge transfer and liaison entre actions de développement de l’économie rurale (links between actions for 

19 

 
the  development  of  the  rural  economy  –  LEADER)  initiatives)  have  not  started  implementing  additional 
administrative preparation and capacity building. Regarding policy monitoring and evaluation, there is ongoing 
development of further functionality and a general improvement of IACS, the farm register and the LPIS, and the 
FADN  is  being  upgraded;  nevertheless,  there  is  a  still  a  requirement  for  stronger  management  and  control 
systems, as the existing systems lack data quality and relevance owing to insufficient resources to maintain them. 
The use of analytical support for policy formation and implementation is modest, irregular and unsystematic, 
and needs to be further fostered and enhanced. Overall, North Macedonia can be considered to be in the initial 
to medium stages for establishing the strategic policy framework. 

In  Serbia,  the  strategic  policy  framework  has  been  significantly  improved  in  the  previous  decade,  with  some 
progress made in policy harmonisation with the EU, although the policy is not fully harmonised with the acquis. 
The IPARD II has contributed to the establishment of the required administrative infrastructure and capacities. 
However, as in the case of North Macedonia, the administrative infrastructure and capacities are reported to be 
insufficient for the administration and coordination of support (particularly the IPARD) and the legal framework. 
In addition, there is varying degrees of support  among farmers and measures are not  tailored  to the specific 
needs of different regions, suggesting a lack of use of the intervention logic framework (particularly monitoring 
and evaluation) when designing the policy measures. Therefore, Serbia is also considered to be at the initial to 
medium stages of application of the strategic planning framework. 

Turkey has adopted strategic documents as part of its comprehensive policy framework for agricultural policy 
and  rural  development,  with  the  IPARD  programme  constituting  an  important  part  of  this  framework.  The 
administrative capacity of the IACS has been developed and has recently been put in place. Although Turkey has 
been harmonising its management and control systems with the EU CAP for about two decades now, this process 
is still not fully accomplished. The common market organisation (CMO) legislation needs to be developed and 
aligned with the EU CMO legislation. The country’s support system also needs to be redesigned to be in line with 
the CAP (e.g. linking direct payments to cross-compliance standards). Turkey has integrated the FADN data into 
its agricultural production and registration system, but further strategies need to be established for aligning the 
agricultural  statistics  with  the  requirement  for  better  monitoring  of  agricultural  policy  performance.  Policy 
monitoring and evaluation are used irregularly for guiding the design and implementation of policies. Overall, 
Turkey can be assessed as being at the initial to medium stages of establishing the strategic policy framework. 

Principle 2: Size and allocation of financial resources 

An implicit prerequisite for joining the EU is the acceptance of support provisions for the farming sector and rural 
areas. This goes beyond direct support for primary agricultural producers (e.g. direct payments) and includes 
support to be granted as part of the rural development programme (Erjavec et al., 2021).  

Figure  5  shows  the  importance  of  agricultural 
support  in  terms  of  its  average  proportion  of 
GDP,  government  spending  and  the  gross 
agricultural output for 2017–2019. For instance, 
the proportion of GDP allocated to support the 
agricultural  sector  in  the  countries/territories 
ranged from 0.29 % in Albania to 1.31 % in North 
Macedonia. In the EU, this proportion is 0.35 %. 
The  proportion  of  spending  allocated 
to 
agricultural  support  out  of  total  governmental 
spending  ranges  from  3 %  to  4 %  in  Kosovo*, 
North  Macedonia  and  Serbia,  whereas  other 
countries/territories  spend  around  1 %  of  their 
total  budget  on  supporting  the  agricultural 
sector. The relative proportion of total support, 
in terms of agricultural GVA, is another indication 
of the variation in the level of support among the 
countries/territories, which ranges from 1.6 % in 
Albania  to  15.6 %  in  North  Macedonia,  lagging 
behind the EU level (26.1 %). 

Figure 5. Total budgetary support for agriculture in terms of GDP, 
government spending and agricultural GVA (2017–2019) 

Note: ‘nat.expend.’ refers to national expenditure and ‘GVA ag.’ refers to 
agricultural GVA. 

Source: WB&TR APMC databases, CAP context indicators (European 
Commission, 2020b). 

20 

 
 
The development of the total annual support allocated to agriculture in the WBs and Turkey in 2010–2019 is 
shown in  Figure 6.  The  support  over time  shows mixed patterns across the  countries/territories. In  Kosovo*, 
Montenegro  and North Macedonia, the total support  shows an increasing trend. The  highest  growth in total 
support is observed in Kosovo*. In the rest of the countries, both positive and negative trends are observed in 
the development of total support in 2010–2019. However, in Turkey, a decrease in support is observed over the 
final 3 years analysed, while, in the rest of countries/territories, support increased in the final 3 years. 

In  absolute  values  for  2017–2019,  Montenegro  and  Albania  have  the  lowest  budget,  namely  less  than 
EUR 30 million  and  EUR 40 million  per  annum,  respectively.  They  are  followed  by  Kosovo*  and  Bosnia  and 
Herzegovina,  with  about  EUR 70 million  and  EUR 80 million,  respectively,  North  Macedonia  with  close  to 
EUR 150 million, Serbia with over EUR 300 million and Turkey with about EUR 2 500 to 3 000 million per annum 
(Figure 6). 

Figure 6. Total budgetary support for agriculture (million EUR, 2010–2019) 

Source: WB&TR APMC databases (2020). 

Considering the large differences between countries/territories in terms of their agricultural area and population, 
the  differences  in  the  total  support  allocated  to  agriculture  are  not  directly  comparable.  Therefore,  Figure 7 
presents a more comparable view of total agricultural support, namely support per hectare (ha) of agricultural 
land  and  per  inhabitant  for  2017–2019.  The  figure  also  provides  comparative  figures  for  the  EU (10).  The 
differences  in  the  support  per  hectare  between  the  countries/territories  are  rather  significant,  ranging  from 
EUR 32 and EUR 39/ha in Albania and Bosnia and Herzegovina, respectively, to EUR 150/ha in Kosovo*. The total 
support  per  hectare  in  the  WBs  and  Turkey  is  less  than  half  of  the  EU  average.  However,  some  of  the  WB 
countries/territories  and  Turkey  are  more  comparable  to  certain  eastern  EU  Member  States,  for  example 
EUR 137/ha in Latvia, EUR 175/ha in Lithuania, EUR 214/ha in Bulgaria and EUR 218/ha in Romania (European 
Commission,  2020a).  Payments  per  inhabitant  vary  from  EUR 13  per  inhabitant  in  Albania  to  EUR 68  per 
inhabitant in North Macedonia. Compared with the EU, the support per inhabitant in the WB countries/territories 
and Turkey is significantly lower. 

(10)  To  correspond  to  the  APMC  concept,  the  EU  CAP  budget  (first  and  second  pillar  measures;  European  Commission,  2020a)  was 

supplemented with ‘other measures related to agriculture’, using the structure reported in Erjavec et al. (2021). 

21 

 
 
 
                                           
Figure 7. Total budgetary support per hectare (EUR/ha; left) and total budgetary support per capita (EUR/inhabitant; right) 
(2017–2019) 

Note: blue indicates market and direct producer support measures, red indicates structural and rural development measures and green 
indicates other measures related to agriculture. 

Source: WB&TR APMC databases (2020), Eurostat (2020), European Commission (2020a). 

Regarding the structure of the agricultural support in the WB countries/territories and Turkey, market and direct 
support measures (first pillar) dominate throughout the whole period for almost all of the countries/territories, 
which  is  also  the  case  in  the  EU.  These  measures  are  followed  by  structural  and  rural  development  support 
(second pillar),  and other agricultural support  (third pillar) which  has the smallest  representation in the total 
support in all countries/territories. 

The  absolute  value  of  the  first  pillar  increased  in  Bosnia  and  Herzegovina,  Kosovo*,  Montenegro  and  North 
Macedonia over last  3 years  of the period analysed, compared with the previous 3-year period (2014–2016), 
whereas, in Serbia and Turkey, it decreased over the same period. Regarding the second pillar, it increased in 
Albania,  Kosovo*  and  Montenegro  and  decreased  in  Bosnia  and  Herzegovina,  North  Macedonia  and  Turkey 
towards the end of the period analysed (Figures 6). Similar to the EU, the proportion of first pillar measures out 
of  the  total  support  allocated  in  the  final  3  years  was  greater  than  75 %  in  Bosnia  and  Herzegovina,  North 
Macedonia,  Serbia  and  Turkey.  The  lowest  proportion  of  support  allocated  to  first  pillar  measures  (less  than 
50 %) was in Albania, Kosovo* and Montenegro. 

Structural  and  rural  development  support  is  seen  most  in  Albania,  Montenegro  and  Kosovo*,  accounting  for 
85 %, 57 % and 50 %, respectively, of total support. In the rest of the countries, this proportion is lower: 6 % in 
Bosnia and Herzegovina, 15 % in North Macedonia and 12 % in Turkey. The proportion of third pillar support is 
greatest in Albania and Montenegro, accounting for around 22 % and 19 % of total support, respectively. In the 
rest of the countries/territories, this proportion is no higher than 6 % (Figure 8). 

22 

 
 
Figure 8. Total budgetary support (% and million EUR; left) and ratio of market and direct producer support to structural 
and rural development support (right) (2017–2019) 

Note: blue indicates market and direct producer support measures, red indicates structural and rural development measures and green 
indicates other measures related to agriculture. 

Source: WB&TR APMC databases, European Commission (2020a). 

Overall in terms of the structure of the total agricultural support, the Serbian support largely resembles the EU 
CAP. Bosnia and Herzegovina, North Macedonia and Turkey also have similar support structures to the EU, except 
that  the  proportion  of  structural  and  rural  development  (second  pillar)  is  smaller  than  that  in  the  EU.  The 
remaining three countries/territories – Albania, Kosovo* and Montenegro – have higher proportions of support 
in the second pillar compared with the EU and significantly less support than the EU in the first pillar. 

Additional  contributions  to  the  total  agricultural  support  in  the  WBs  and  Turkey  come  from  the  EU’s  rural 
development component of pre-accession assistance (Table 7). The IPARD forms part of the instrument for pre-
accession assistance (IPA), which supports reforms in countries that are in the process of joining the EU. The 
IPARD targets its support to rural areas and the agri-food sectors of candidate countries to prepare them for the 
future  accession  in  these  areas.  It  must  be  noted  that  the  role  of  the  IPARD  is  much broader  than  providing 
financial support, as it also helps pre-accession countries prepare for the effective implementation of structural 
and rural development policies upon accession. 

23 

 
 
Table 7. IPARD II payments in candidate countries (million EUR, unless otherwise stated) 
MK (2018–2019) 
AL (2019) 

ME (2019) 

Indicator 

RS (2019) 

TR (2017–2019) 

0.03 

0.40 

7.70 

6.10 

130.95 

Measure 1: Investments in physical 
assets of agricultural holdings 

Measure 3: Investments in physical 
assets  concerning  processing  and 
marketing  of  agricultural  and 
fishery products 

1.05 

1.42 

5.47 

Measure 
climate 
measures 

4:  Agri-environment, 
farming 

and  organic 

– 

Measure 7: Farm diversification and 
business development 

0.10 

Measure 9: Technical assistance 

– 

Total IPARD II payments 

EU contribution 

National contribution 

Total SRD budget 

IPARD II in total SRD budget (%) 

EU allocated amounts 

Funds used by end of 2019 (%) 

1.18  

0.88 

0.30 

25.89 

4.6 

71 

1.2 

– 

– 

– 

1.82  

1.36 

0.46 

10.08 

18.1 

39 

3.5 

– 

0.08 

0.01 

13.26 

9.95 

3.31 

37.89 

35.0 

60 

16.6 

– 

– 

– 

– 

6.10  

4.58 

1.52 

62.24 

9.8 

175 

2.6 

42.93 

0.36 

65.50 

– 

239.75 

162.83 

76.91 

1052.85 

22.8 

801 

20.3 

Notes: Albania, Montenegro and Serbia have payments in 2019, North Macedonia has payments in 2018 and 2019, and Turkey has payments 
in 2017, 2018 and 2019; Data concerning Measure 9 budget for Turkey are not available. SRD: structural and rural development. 

Source: WB&TR APMC databases, country case studies. 

It should be noted that the IPARD is not operational in all countries/territories. The IPARD programmes for 2014–
2020 are available only in Albania, Montenegro, North Macedonia, Serbia and Turkey. IPARD II payments came 
into  force  in  2019  in  Albania,  Montenegro  and  Serbia,  while  in  North  Macedonia  and  Turkey  the  payment 
disbursement started in 2018 and 2017, respectively. 

As  reported  in  Table 7,  two  measures  are  operational  in  all  candidate  countries:  measure  1,  ‘Investments  in 
physical assets of agricultural holdings’, and measure 3, ‘Investments in physical assets concerning processing 
and marketing of agricultural and fishery products’. Measure 7, ‘Farm diversification and business development’, 
is operational in Albania, North Macedonia and Turkey, while measure 9, ‘Technical assistance’, is operational in 
North Macedonia and Turkey. Turkey has also implemented measure 4, ‘Agri-environment, climate and organic 
farming’, and measure 5, ‘Implementation of local development strategies – LEADER approach’ since 2020. 

In terms of the distribution of funds among measures (11), there are noticeable country differences (Table 7). 
Namely, in Albania, 89 % of the IPARD II payments are allocated to measure 3, 8.5 % are allocated to measure 7 
and 2.5 % are allocated to measure 1. A similar distribution is present in Montenegro, with 78.1 % allocated to 
measure 3 and 21.9 % allocated to measure 1. In North Macedonia, more funds are used for measure 1 (58 %) 
than measure 3 (41 %), while funds for measures 7 and 9 are still modest. Serbia has so far directed all of its 
funds to measure 1. Payments in Turkey are allocated mostly to measure 1 (55 %), followed by measures 7 (27 %) 
and 3 (18 %). 

The proportion of IPARD II payments in the total structural and rural development transfers varies among the 
countries: Albania (4.6 %), Montenegro (18.1 %), North Macedonia (11.6 % in 2018 and 45.2 % in 2019), Serbia 
(9.8 %) and Turkey (6.3 % in 2017, 31.8 % in 2018 and 22.8 % in 2019). Nevertheless, because of the delayed start 
of IPARD II, only a small proportion of the available funds had been used by the end of 2019, namely 1.2 % in 
Albania, 3.5 % in Montenegro, 16.6 % in North Macedonia, 2.6 % in Serbia and 20.3 % in Turkey. IPARD II funds 
were, however, being increasingly used in 2020 and 2021 in all beneficiary countries. 

(11)  This is based on realised payments over the years according to the APMC methodology.  

24 

 
 
 
                                           
Principle 3: Direct producer support 

Adapting direct producer support is the most politically sensitive area of agricultural policy, as it is the largest 
component of such policies. It involves providing a significant amount of support to the farming sector, which 
can  have  substantial  implications  for  distributional  income  across  sectors,  farm  types  and  regions.  Upon 
accession,  candidate  countries  are  expected  to  modify  their  producer  support  system  to  meet  the  EU’s 
requirements (i.e. to shift to CAP-style support) (Erjavec et al., 2021). 

Direct producer support is the most prevalent of the first pillar measures in all of the WB countries/territories 
and Turkey, accounting for 94 % of these measures in Montenegro and 99–100 % in other countries/territories. 
Figure 9 shows the distribution of direct producer support measures in the WB countries/territories and Turkey 
for 2017–2019. The figure revels that direct payments in a coupled form (per hectare, animal or output) are the 
dominant support measure throughout this period. In contrast, decoupled payments, which constitute the main 
type  of  direct  payment  measure  in  the  EU,  are  not  incorporated  in  the  agricultural  policies  in  the  WB 
countries/territories and Turkey. 

Figure 9. Direct payments to producers (% and million EUR, 2017–2019) 

Source: WB&TR APMC databases. 

Direct payments paid per hectare or per animal make up a slightly bigger proportion of total direct producer 
support than direct payments paid per output in almost all of the WB countries/territories. The exceptions are 
Bosnia and Herzegovina and Turkey, where payments per output are the most prevalent measure. 

Input  subsidies  are  much  less  common  than  direct  payments.  Turkey  has  the  highest  proportion  of  input 
subsidies among total direct producer support compared with the other countries/territories. Serbia had a more 
sizable proportion of input subsidies in the early 2010s, but these measures have decreased in the last 3 years. 
In contrast with other countries/territories, Albania has a considerable proportion (40 %) of its direct producer 
support allocated to disaster and other compensations to producers, with Turkey having the second greatest 
proportion. 

Direct producer support in the WBs and Turkey is implemented through a relatively large number of measures 
and, in most countries/territories, is subject to frequent changes over time. For example, since 2015, most WB 
countries/territories have introduced new direct support schemes, increased or decreased the rates of certain 
schemes  and/or  changed  the  eligibility  criteria  for  some  schemes.  However,  the  overall  structure  of  direct 
support has remained almost entirely unchanged in recent years. 

In the EU, coupled support makes up a significantly smaller proportion than in the WB countries/territories and 
Turkey,  accounting  for  less  than  15 %  of  total  direct  producer  support  (European  Commission,  2020a).  This 
implies that the WB countries/territories and Turkey  will  have to adapt  to this policy  orientation (i.e. reduce 
coupled support) once they join the EU. 

25 

 
 
Principle 4: Measures to improve competitiveness 

The  CAP  provides  a  broad  array  of  measures  that  target  the  improvement  of  competitiveness  within  the 
agricultural sector. These measures include providing investment support to primary agricultural producers, food 
processers, producer organisations and food quality schemes. The pre-accession period is crucial for establishing 
the administrative capacity for the disbursement of support targeting competitiveness within the agricultural 
sector. The implementation of IPARD support before accession can contribute to developing capacities in this 
direction in the WBs and Turkey (Erjavec et al., 2021). 

In  general,  measures  to  improve  competitiveness  within  the  agricultural  sector  are  the  most  dominant 
instruments within the second pillar – support for structural and rural development – in the WBs and Turkey. To 
reduce the gap in productivity between rural and urban regions and the  gap in productivity of the agricultural 
sectors between the WBs/Turkey and the EU, a flow of investments is required to stimulate the restructuring of 
and improvement in the competitiveness within the pre-accession countries’ farming sector. This is reinforced 
by the fact that small farms dominate the farm structure in the WBs, and most of them face constrained access 
to credit and investments (Kotevska and Martinovska Stojcheska, 2015; Volk et al., 2017; Pokrivcak et al., 2019; 
Todorović et al., 2020; Erjavec et al., 2021). These issues can be addressed through structural policy measures, 
especially measures supporting investments in new technology, agricultural infrastructure, quality standards and 
knowledge  transfer.  These  factors  seem  to  explain  why  support  for  improving  competitiveness  is  the  most 
important instrument within the second pillar, accounting for about 70–90 % in the WBs. Only in Turkey is second 
pillar support rather equally split between the competitiveness component and support for the rural economy 
and population. For comparison, in the EU, support for improving competitiveness represents less than one third 
of all second pillar support. Various support measures to improve competitiveness within the agricultural sector 
were applied in the WB countries/territories and Turkey in 2013–2017. With some exceptions, most funds were 
allocated to on-farm investments and to restructuring support in all countries/territories. 

Food safety and quality control also affect agricultural competitiveness indirectly, as they promote improvement 
of product and service quality and market access. In addition, research and development, advisory services and 
the  transfer  of  knowledge  are  important  instruments  for  supporting  agricultural  competitiveness  through 
stimulating productivity growth. According to the APMC, these two measures belong to the third pillar (i.e. other 
measures related to agriculture). Of the two measures, the budget for food safety and quality control measures 
is greater in all of the countries/territories. This is also reflected by the largely positive assessment in the EU 
progress reports on the progress made in the context of the accession process in terms of Chapter 12 of the EU 
acquis (food safety, veterinary and phytosanitary policy) in the WBs and Turkey. However, the amount of support 
for research, knowledge development and transfer remains insignificant in the WBs and Turkey. 

As shown in Figure 10, the distribution of the support targeting agricultural competitiveness (disbursed mainly 
as on-farm investment support) represents more than 50 % of the total competitiveness support in all of the 
countries/territories,  followed  by  support  for  food  safety  and  quality  control  (between  0 %  and  20 %)  and 
research, development, and advisory and expert services support (less than 10 %). 

Figure 10. Measures for increasing competitiveness (million EUR and %, 2017–2019) 

Source: WB&TR APMC databases, 2020. 

26 

 
 
 
Principle 5: Policies for sustainability and public goods provision by the farming sector 

Acceding  countries  are  expected  to  adopt  the  CAP’s  sustainability  model,  by  ensuring  that  their  agricultural 
policies  support  and  promote  environmental  protection,  nature  conservation,  animal  welfare,  public  health 
related to food, food safety, other societal public goods and the social development of the farming sector. This 
is a key priority for the EU, as it is an economic justification for the provision of the size and type of support given 
to the agricultural sector, and aims to address market failures related to the underdelivery of environmental and 
agricultural  public  goods.  Some  of  the  key  CAP  measures  in  this  area  include  agri-environment  and  climate 
measures,  support  for  organic  farming,  support  for  areas  with  natural  constraints  and  high  natural  value 
farmland, animal welfare measures and environmental conditionality linked to direct producer support. The pre-
accession period is crucial for establishing the administrative capacity to identify areas that contribute to the 
improvement of the environment and to provide support that targets the environment (Erjavec et al., 2021). This 
is motivated by the fact there is growing evidence that the WBs and Turkey suffer from a number of sustainability 
and environmental issues such as the intensification of production on certain farm types, the increased use of 
pesticides,  adverse  effects  of  climate  change,  land  degradation,  and  pollution  of  water,  soil  and  air  (e.g. 
Evrendilek and Ertekin 2002; Solomuna et al., 2018; Van’t Wout et al., 2019). 

The WB countries/territories and Turkey have explicitly expressed their commitment in their medium- and long-
term strategy documents, where they have outlined the economic, environmental and social objectives of their 
agricultural policies, and the alignment of these policies with the CAP. However, there is a significant gap when 
it comes to the implementation of specific measures. The WBs and Turkey have minimal provisions in place for 
providing environmental and societal support. Overall, the proportion of support for environmental and societal 
benefits out of the total support for structural and rural development ranges from 0 % in Albania to 11 % in North 
Macedonia (Table 8). Agri-environmental and climate support schemes are not used on a large scale in any WB 
country/territory or in Turkey. Only in North Macedonia and Turkey are agri-environmental and climate support 
schemes more sizable. Albania does not implement environmental measures. Organic farming is supported in 
Bosnia and Herzegovina, Montenegro, North Macedonia and Serbia, but funds are small. For a comparison, in 
the EU, environmental  support  accounts for  more than half of  second pillar support  (i.e. structural and rural 
development support). 

In addition, concerning first  pillar payments, cross-compliance and environmental conditionality for receiving 
direct payments are largely not applied in the WBs and Turkey. In contrast, this is a standard requirement for 
direct payments in the EU’s CAP. 

Table 8. Support for environmental and societal benefits 

Indicator 

Value (million EUR) 

Proportion  of  budget  for  structural  and 
rural development (%) 

Source: WB&TR APMC databases, 2020. 

AL 

– 

– 

BA 

0.08 

XK 

0.08 

ME 

0.51 

MK 

2.03 

RS 

TR 

1.84 

27.79 

1.5 

0.3 

4.7 

10.6 

3.4 

7.9 

Principle 6: Quality of life and employment in rural areas 

Beyond the farming sector, the CAP also focuses on providing support to improve quality of life and employment 
in rural areas. This includes developing rural infrastructures, social services, village renewal, diversified activities 
(e.g. agri-tourism) and local development strategies. The need for this policy is demonstrated by the fact that 
many rural areas in the EU suffer from structural problems such as a lack of employment, skills shortages, ‘youth 
drain’ and underinvestment in infrastructure and social services (Erjavec et al., 2021). 

As discussed above, rural areas in the WBs and  Turkey also face  significant  structural problems, in particular 
related to depopulation, ageing, weak labour markets, and poor infrastructure and social services. With respect 
to support, the situation in this area is somewhat more advanced than is the case for environmental and public 
goods support in the WBs and Turkey. However, with the exception of Turkey, the amount of resources allocated 
to support for the rural economy and population is relatively low. Among second pillar support, support in this 
area accounts for 40 % in Turkey, 21 % in North Macedonia, 18 % in Montenegro and less than 10 % in the rest 
of the countries/territories (Table 9). In the EU, the proportion of support for the rural economy and population 
represents around 15 % of all second pillar support (European Commission, 2020a). 

27 

 
An important aspect of the EU’s rural development is its bottom-up approach, in which local players identify the 
local  requirements  for  development,  with  measures  implemented  primarily  through  the  LEADER  initiative 
(European Commission, 2019). The countries most advanced in developing the bottom-up approach appear to 
be Turkey and North Macedonia. Turkey has reported successful implementation of the IPARD programme as a 
result  of  the  local  action  strategies  developed  under  LEADER  and  the  involvement  of  civil  society.  In  North 
Macedonia,  the  LEADER  initiatives  for  establishing  local  action  groups  and  supporting  local  development 
strategies have been implemented quite recently. Other countries/territories lag behind. For example, Albania 
has not yet adopted the relevant legislation needed to establish LEADER initiatives. Bosnia and Herzegovina lacks 
the  measures  to  improve  the  rural  economy;  those  measures  that  are  available  primarily  aim  to  improve 
infrastructure. In general, the underdevelopment of the LEADER initiatives may explain the difficulties present in 
identifying and developing relevant measures to support the improvement of quality of life and employment in 
rural areas in some countries/territories. 

Furthermore, as discussed above, alongside the relatively small budget allocated to providing support to improve 
quality of life and employment in rural areas, the WBs and Turkey  also lack statistical data that would allow a 
better  understanding  and  an  evaluation  of  the  socioeconomic  situation  in  rural  areas.  This  has  potential 
implications for the design of policy measures, given that the lack of statistical data reduces the possibility of 
monitoring and evaluating policy performance and of designing specific measures to reflect local needs. 

Table 9. Support for the rural economy and population 

Indicator 

Value (million EUR) 

AL 

0.35 

BA 

0.39 

XK 

2.94 

ME 

1.98 

MK 

4.02 

RS 

TR 

4.09 

140.27 

Proportion  of  budget  for  structural  and 
rural development (%) 

Source: WB&TR APMC databases, 2020. 

1.5 

7.8 

9.9 

18.4 

20.9 

7.5 

40.0 

1.5.  Conclusions and recommendations 

The agricultural sector is an important  sector in the WB countries/territories and Turkey. Although there is a 
significant  heterogeneity  across  the  countries/territories,  the  sector  makes  a  major  contribution  to  these 
countries’ economic growth, employment and trade. Despite being an important source of income for a major 
proportion of the population, the productivity of the agricultural sector lags behind other sectors of the economy. 
The WBs and Turkey show some increases in key crops and livestock yields and in labour productivity over time, 
but they remain largely below the average EU level. The WBs and Turkey also face significant structural problems 
in rural areas, in particular related to depopulation, ageing, weak labour markets, and poor infrastructure and 
social services. Furthermore, the agricultural sector in the WBs and Turkey suffers from a number of social and 
environmental sustainability issues. 

Agricultural policies can play a  crucial role in addressing some of these challenges in the WBs and Turkey. In 
promoting the growth of the agricultural sector and rural areas, the key challenge is to find a balance between 
promoting  agricultural  productivity  and  competitiveness  and  creating  conditions  for  the  protection  of  the 
environment  and  social  sustainability  in  rural  areas.  Furthermore,  one  of  the  main  political  goals  of  the  WB 
countries/territories  and  Turkey  is  accession  to  the  EU.  From  the  perspective  of  the  agricultural  sector,  this 
implies that the CAP represents the benchmark for setting future agricultural policy in the WBs and Turkey. 

The objective of this chapter was to provide a cross-country overview of agricultural policy developments in the 
WBs and Turkey and to analyse their state of harmonisation with the EU’s CAP. The comparative analyses carried 
out  follow  the  conceptual  framework  that  defines  the  key  harmonisation  principles  required  to  align  the 
agricultural  policies  of  the  WBs  and  Turkey  with  the  EU’s  CAP.  The  quantitative  analyses  carried  out  were 
performed using the APMC tool and StatDatabase. The chapter provides an overview of the agricultural policies 
for 2010–2019 and more detailed analyses for the more recent developments, namely those observed in the last 
3 years (2017–2019). 

All of the WB countries/territories and Turkey have in place operational policy frameworks for designing and 
implementing agricultural policies. Overall, the WB countries/territories and Turkey adopted, to a large extent, 
the  sustainability  model  in  their  medium-  and  long-term  strategic  planning  for  future  agricultural  policies  by 
aiming to promote economic, environmental and social objectives in the agricultural sector and rural regions. 
However,  when  it  comes  to  the  implementation  of  these  policies,  the  support  has  a  sectorial  focus  and  is 

28 

 
primarily aimed at stimulating the production or competitiveness of the agricultural sector or rural regions, with 
environmental support playing a marginal role. 

The alignment of the agricultural policies of the WBs and Turkey with the EU’s CAP is rather heterogeneous across 
the countries/territories. Overall, the agricultural policies of the WBs and Turkey are more in line with the CAP 
in terms of commitment and future planning than in terms of the policy measures actually implemented. 

increasing  trend 

Overall,  the  total  agricultural  support  has  shown  an 
in  the  WB 
countries/territories  and  has  shown  a  notable  decrease  in  Turkey.  On  a  per  hectare  basis,  the  total  support 
ranges from EUR 32/ha in Albania to EUR 150/ha in Kosovo* and is less than half of the EU average. Regarding 
the  structure  of  agricultural  support,  market  and  direct  support  measures  (first  pillar)  are  the  predominant 
measures  of  support  in  almost  all  of  the  countries/territories,  which  is  also  the  case  in  the  EU,  followed  by 
structural and rural development support (second pillar), with other agricultural support (third pillar) having the 
smallest  representation  (e.g.  research,  development,  advisory  and  expert  services,  food  safety  and  quality 
control). 

in  recent  years 

A more significant difference between the agricultural policies of the WBs/Turkey and the EU’s CAP is in the type 
of measures implemented. First, the WBs and Turkey differ significantly from the EU in terms of the type of direct 
support (payments) granted to primary agricultural producers. The main form of direct support in the WBs and 
Turkey  is  coupled  payments  granted  as  area  payments  for  the  cultivation  of  specific  crops  or  payments  paid 
based on animal numbers. In contrast, the main type of direct support in the EU is decoupled payments, which 
are linked to land, but do not require the production of a specific crop, or production at all, and are conditional 
on fulfilling environmental measures. 

A second important difference between the WBs and Turkey and the EU’s CAP is the composition of structural 
and rural development support. Given the different country-/territory-level challenges in the WBs and Turkey, 
this support is almost entirely targeted at improving competitiveness within the agri-food sector, and less tends 
to be allocated to promoting quality of life and employment in rural areas and, in particular, to promoting the 
delivery of environmental and agricultural public goods. In the EU, the reverse situation tends to hold as regards 
the composition of structural and rural development support. 

However, some heterogeneity is observed in these patterns across the countries/territories and there are some 
attempts at harmonisation with the CAP. For example, Albania, Kosovo* and Montenegro have a more balanced 
distribution of structural and rural development in terms of budgetary support across the different measures, 
although  the  overall  level  of  support  remains  relatively  low.  In  Serbia,  recent  changes  introduced  to  the 
agricultural policy led to the allocation of support across different pillars, such that it significantly resembles the 
CAP allocation structure between the three pillars. While North Macedonia and Turkey dedicate most of their 
support  to  market  and  direct  support  measures,  these  two  countries  also  allocate  a  sizable  proportion  of 
resources to supporting environmental and agricultural public goods and quality of life and employment in rural 
areas, respectively. The promotion of organic farming is the most common environmental measure applied in 
the countries/territories in the region, although this support accounts for a small proportion of the total support. 

An additional major challenge, related to the alignment of the agricultural policies of the WBs and Turkey with 
the EU that still remains unsolved in the region, is linked to capacity building and the institutional set-up in the 
public  administration  responsible  for  managing  and  implementing  agricultural  support.  This  aspect  of  the 
agricultural  policy  is  key  to  ensuring  effective  design,  enforcement  and  implementation  of  different  policy 
instruments and measures. Functioning administrative, financial, control and information systems  – such as a 
paying agency, IACS or LPIS – are important prerequisites for designing, enforcing and implementing agricultural 
policies.  The  implementation  of  the  IPARD  programme  significantly  contributes  to  the  preparation  and 
development of the capacities in this direction. 

The farming structure in the WBs and Turkey, which is dominated by small-scale (often subsistence and semi-
subsistence) farms, combined with the low productivity of rural regions in these countries/territories, points to 
the need to strengthen farms’ market position and productivity growth via having knowledge, innovation and 
technology  that  is  more  accessible  to  the  farming  sector.  While  some  support  is  granted  in  this  area  and 
agricultural extension services are operational in each of the countries/territories, further improvement in this 
respect is needed in the region given that significant gaps persist. 

The WBs and Turkey need to improve their strategic policy framework with respect to monitoring and analytical 
capabilities to ensure that, upon eventual accession, they are able to implement the CAP policy cycle, consisting 
of,  among  other  things,  planning,  evaluation  and  contribution  to  the  formulation  of  policy  support.  Major 

29 

 
shortcomings in this respect are linked to the limited  availability of relevant  data, including basic agricultural 
statistics, farm surveys and, in particular, rural development data. Furthermore, policies are usually designed, 
prepared  and  implemented  without  systematically  applying  monitoring  and  policy  impact  analyses.  These 
shortcomings, among others, make it difficult to identify policy needs, design policy measures, identify relevant 
policy  targets  in  terms  of  regions  or  population  groups  and  assess  the  efficiency  and  impacts  of  the  policy 
measures implemented, namely if they have achieved the objectives set. The effects of these shortcomings are, 
among others, reflected in the unclear identification of policy objectives and priorities, inconsistencies between 
medium-/long-run  strategic  planning  and  the  short-term  implementation  of  the  agricultural  policy,  and  the 
frequent changes introduced to measures and allocated funds over time, which creates a rather unstable policy 
environment for both the agricultural sector and rural communities. 

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Pokrivcak, J., Ciaian, P. and Drabik, D. (2019), ‘Perspectives of central and eastern European countries on research 
and innovation in the new CAP’, EuroChoices, Vol. 18 No 1, pp. 26–32. 

Volk,T.,M.Rednak,  E.Erjavec,  I.Rac,  E.Zhllima,  G.Gjeci,  S.Bajramović,  Ž.Vaško,  M.Kerolli-Mustafa,  E.Gjokaj, 
B.Hoxha, D.Dimitrievski, A.Kotevska, I.Janeska Stamenkovska, D.Konjevic, M. Spahic, N. Bogdanov, M.Stevović 
(authors),  B.  Ilic,  D.  Pavloska  -Gjorgjieska,  P.  Ciaian  (editors).  Agricultural  policy  developments  and  EU 
approximation  process  in  the  Western  Balkan  countries,  EUR  29475  EN,  Publications  Office  of  the  European 
Union, Luxembourg, 2019, ISBN 978-92-79-98107-4, doi:10.2760/583399, JRC114163. 

30 

 
 
Rednak, M., Volk, T. and Erjavec, E. (2013), ‘A tool for uniform classification and analyses of budgetary support 
to agriculture for the EU accession countries’, Agricultural Economics Review, Vol 14, No 1, pp. 76–96. 

Solomuna, M. K., Barger, N., Cerdac, A., Keesstra, S. and Marković, M. (2018), ‘Assessing land condition as a first 
step to achieving land degradation neutrality: A case study of the Republic of Srpska’, Environmental Science & 
Policy, Vol 90, pp. 19–27. 

Todorović, S., Papić, R., Ciaian, P. and Bogdanov, N. (2020),  ‘Technical efficiency of arable farms in Serbia: Do 
subsidies matter?’, New Medit, Vol 4, pp. 80–97. 

Van’t Wout, T., Sessa, R. and Pijunovic, V. (2019), ‘Good practices for disaster risk reduction in agriculture in the 
Western Balkans’, in Filho, W. L., Goran, T. and Filipovic, D. (eds), Climate Change Adaptation in Eastern Europe, 
Springer, Cham, Switzerland, pp. 369–393. 

Volk, T. (ed.) (2010), Agriculture in the Western Balkan Countries. Studies on the agricultural and food sector in 
central and eastern Europe, Vol. 57, Leibniz-Institut für Agrarentwicklung in Mittel- und Osteuropa (IAMO), Halle, 
Germany. 

Volk, T., Erjavec, E. and Mortensen, K. (eds) (2014), Agricultural Policy and European Integration in South-Eastern 
Europe, Food and Agriculture Organization of the United Nations, Budapest. 

Volk,  T.,  Erjavec,  E.,  Ciaian,  P.,  and  Gomez  y  Paloma,  S.  (eds)  (2016),  Analysis  of  the  Agricultural  and  Rural 
Development Policies of the Western Balkan Countries, EUR 27898 EN, Publications Office of the European Union, 
Luxembourg. 

Volk, T., Rednak, M., Erjavec, E., Zhllima, E., Gjeci, G., Bajramović, S., Vaško, Ž., Ognjenović, D., Butković, J., Kerolli 
Mustafa, M., Gjokaj, E., Hoxha, B., Dimitrievski, D., Kotevska, A., Stamenkovska, I. J., Martinovic, I. J., Konjevic, 
D., Spahic, M., Bogdanov, N., Papić, R. and Todorović, S. (authors), Volk, T., Erjavec, E., Ciaian, P., Gomez y Paloma, 
S. (eds) (2017), Monitoring of Agricultural Policy Developments in the Western Balkan Countries, EUR 28527 EN, 
Publications Office of the European Union, Luxembourg. 

Volk,T., M. Rednak, E.Erjavec, I. Rac, E. Zhllima, G. Gjeci, S.Bajramović, Ž.Vaško, M. Kerolli-Mustafa, E. Gjokaj, 
B.Hoxha, D. Dimitrievski, A. Kotevska, I. Janeska Stamenkovska, D. Konjevic, M. Spahic, N. Bogdanov, M. Stevović 
(authors),  B.  Ilic,  D.  Pavloska-Gjorgjieska,  P.  Ciaian  (editors)  (2019),  Agricultural  policy  developments  and  EU 
approximation  process  in  the  Western  Balkan  countries,  EUR  29475  EN,  Publications  Office  of  the  European 
Union, Luxembourg. 

Zubić, G., Vaško, Ž., Ostojić, A., Marković, B. and Brković, D. (2019), Economic Contribution of Forestry to Rural 
Development of the Republic of Srpska, Analysis, Ministry of Agriculture, Forestry and Water Management of the 
Republic of Srpska, Banja Luka, Bosnia and Herzegovina. 

31 

 
 
2.  CASE STUDY: ALBANIA 

Edvin Zhllima (12) 

2.1. 

Introduction 

The agriculture sector has played and will continue to play an important role in the Albanian economy, in terms 
of its contribution to both GDP and employment. The main agricultural policy document is the ISARD for 2014–
2020, which follows the priorities set out in the national strategy for development and integration for 2015–
2020, the National Plan for European integration (NPEI) for 2019–2021, the Government of Albania programme 
for 2017–2020 and the yearly priorities of the Ministry of Agriculture and Rural Development (MARD). 

Agriculture and rural development policies are crucial in the framework of Albania’s integration in the EU.  The 
country’s agriculture and rural development policies are reaching a turning point. The country is in the process 
of updating most of its sector strategic policy documents, including the preparation of the ISARD for 2021–2027. 
Moreover, the European Council, in March 2020, opened the accession negotiations for Albania, subject to the 
European Commission’s endorsement and a proposal for a revised methodology for enlargement.  

Since  2006,  the  Government  of  Albania  has  been  following  and  updating  the  nNational  Plannp  for  European 
integration.  This  strategic  document  determines  the  country’s  path  for  aligning  its  agricultural  and  rural 
development policy with the EU CAP (13). Given the significant work that will be required in the near future, it is 
important  to  assess  the  country’s  promptness  in  continuing  the  necessary  reforms  in  agriculture  and  rural 
development and its ability to accept the necessary assistance for addressing sector shortcomings and moving 
forward along its path towards EU membership. 

This report presents the state of affairs of the country’s agricultural policy and its level of harmonisation with the 
current  (and  future)  CAP  by  assessing  the  policy  framework  and  illustrating  the  socioeconomic  aspects  of  its 
policy that are associated with agriculture and rural development. The main methodological approach is based 
on a review of research studies and policy documents, combined with the analytical use of information provided 
through statistics and the agricultural policy measures (APM) database (14) updated for 2010–2019. The data for 
the  latter  are  collected  by  the  National  Statistical  Office  of  Albania  (INSTAT),  the  Agriculture  and  Rural 
Development Agency (payment agency), the MARD and related departments and agencies. The report provides 
the basis for a comparison between Albanian agriculture and rural development policy and the policies of other 
WB countries and Turkey, as well as new Member States in the year before their accession. 

2.2. 

State of the agri-food sector 

During the last decade, Albania has experienced economic growth of around 3 % per year, but, in 2019, economic 
growth shrank to 2.2 % (Figure 11). The decelerating trend in 2019 was caused by contractionary effects related 
to  the  earthquake  and  a  drastic  decline  in  rainfall  that  cut  hydroelectric  power  production  (World  Bank, 
2018) (15). The unemployment rate in 2019 was 11.5 %. By contrast, the inflation rate has decreased slightly in 
recent  years,  with a  value of  1.5 % in 2019. In 2019, from  the production perspective, economic growth was 
supported by the expansion of activities in the service sector, accompanied by fluctuations in the construction 
and industry sectors. From the aggregate demand perspective, economic growth was largely supported by the 
increase of private consumption until 2018. 

The agriculture sector has experienced a gradual increase in terms of GVA in the last few years, with GVA value 
up to EUR 2.5 billion in 2019. Agriculture’s contribution to the total economy in terms of GVA has been stagnating 
at the level of 21 %, while the sector’s contribution to employment has reduced 10 percentage points in the last 
decade  (Figure 11).  Migration  and  increased  productivity  have  contributed  to  a  reduction  in  the  number  of 
people employed in agriculture. 

(12)   Faculty of Economics and Agribusiness, Agricultural University of Tirana, Tirana, Albania; ezhllima@ubt.edu.al 
(13)  Agriculture and rural development is of major importance for the achievement of the country’s international commitments, such as 
sustainable development goal 2 of the post-2015 development agenda and the objectives set out in Chapter 14 of Agenda 21. 

(14)  This database was compiled for Albania under the SWG projects. 
(15)  An expansion in domestic demand led to growth in 2019, while net exports reduced growth, as stagnant growth among trade partners 

limited traditional exports, while energy exports declined. 

32 

 
                                           
Figure 11. Agriculture’s contribution to total GVA and employment (%, 2010–2018) 

Source: AL StatDatabase (2020) 

Labour  productivity  in  the  agriculture  sector  has  been  increasing  continuously,  accounting  for  EUR 5 515  per 
person working in agriculture in 2019 (Figure 12). Despite the increase in the GVA per worker in recent years, 
Albania still has the lowest level of GVA per worker compared with the other WB countries (FAO et al., 2019). 

Figure 12. Economic growth (% change in GDP), inflation and unemployment rate (%) (2010–2019) 

Source: AL StatDatabase (2020). 

There  are  no  updated  data  on  the  number  or  structure  of  farms.  Based  on  data  from  2012,  there  are 
approximately 350 000 farms in the country. The average utilised agriculture area (UAA) per farm, based on the 
figures of 2013, is 1.9 ha. Approximately 45 % of all farms lie in the category of 0–1 ha (as arable land), 41 % of 
farms are 1.1–2 ha and only 14 % of farms have a surface area of more than 2 ha. The average farm size is slightly 
more than 1.2 ha and the average plot size in 2012 was 0.26 ha, according to the Albanian Institute of Statistics 
(INSTAT, 2013). 

Figure 13. Value added per worker in the sector of agriculture, forestry and fishing (thousand EUR, 2010–2019) 

Source: AL StatDatabase (2020). 

Crop production in Albania is mainly composed of forage and cereals (36 % and 25 % of crop area, respectively). 
The vegetable sector, although covering a smaller crop area, is a large contributor in cash incomes. The sector 
continues  to  experience  a  highly  positive  trend  in  terms  of  production,  especially  in  terms  of  greenhouse 
agriculture, with the quantity produced in 2005 approximately doubling, reaching 1 166 000 tonnes (t) in 2018 
(Figure 14). This shift  into more intensive production has almost  doubled the production volume per hectare 
(20.6 t/ha in 2015 to 36.8 t/ha in 2018). Positive trends are also reported in terms of production quantities for 
potatoes, but this is not as dynamic as in the case of vegetables. 

33 

 
 
 
 
Figure 14. Area of production for crops (thousand hectares, 2010–2018) 

Source: AL StatDatabase (2020). 

Production  of  perennial  crops  overall,  composed  mainly  of  stone  and  pome  fruits,  citrus,  grapes  and  olives, 
continues to increase in Albania. Production is boosted by a gradual increase in the planted area and improved 
production yields. The production of  pome fruits (especially apple)  and citrus has been growing from year to 
year, unlike grape and olive production, which has experienced a period of years with stable levels of production 
but has recently seen slight decreases (Figure 15). 

Figure 15. Fruit tree production (thousand tonnes, 2010–2019) 

Source: AL StatDatabase (2020). 

Livestock farming is a very important activity in terms of income generation for the majority of farms in rural 
Albania, considering that 86 % of farms in the country pursue livestock activity (Gjeci et al., 2018). Trends in terms 
of size reveal that beekeeping and poultry are performing positively, while farming of small ruminants and cattle 
is experiencing a decreasing (negative) trend (Table 10). 

The agriculture sector has gained in importance in terms of trade. Since 2013, there has been a considerable 
increase in agri-food exports as a proportion of total exports (12 % in 2019), while the proportion of agri-food 
imports within total imports has been stagnating (17 % in 2019). Despite the positive trends, the trade deficit has 
continued to gradually increase. Nevertheless, agri-food exports as a proportion of agri-food imports in Albania 
have continued to increase (from 12 % in 2005 to 32 % in 2019 – the highest registered) (INSTAT, 2020). 

The EU remains Albania’s most important trade partner for both exports and imports of agri-food commodities 
(67 % of total agri-food exports and 62 % of imports during 2019) (Figure 16). The WB countries/territories are 
the destination of 25 % of Albanian agri-food exports and are the origin of 11 % of agri-food imports. 

34 

 
 
 
Table 10. Herd size (in thousands) of livestock subsectors by year (2010–2019) 

Livestock 

Cattle 

2010 

2011 

2012 

2013 

2014 

2015 

2016 

2017 

2018 

2019 

493 

492 

498 

498 

500 

504 

492 

475 

467 

416 

Small ruminants 

2 581 

2 517 

2 619 

2 722 

2 800 

2 850 

2 913 

2 859 

2 781 

2 621 

Pigs and sows 

177 

175 

171 

174 

183 

182 

194 

192 

196 

184 

Perissodactyl 

98 

99 

97 

93 

91 

91 

95 

89 

88 

87 

Poultry  

Beehives  

Source: INSTAT (2020). 

8 437 

9 292 

9 493 

8 928 

9 493 

8 558 

8 326 

7 835 

8 362 

8 179 

218 

233 

239 

246 

261 

271 

303 

290 

285 

288 

Figure 16. Agri-food trade performance in terms of exports, imports and trade balance (million EUR) 

1000

500

0

-500

-1000

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

Export

Import

Trade deficit

Source: AL StatDatabase (2020). 

No new statistical data have been available in Albania since 2014. Based on a review of data, statistics on farm 
structure, farm population, agriculture economic accounts and prices are still lacking. Farm survey data are not 
available  and  are  only  for  internal  use  (calculation  of  national  accounts)  by  INSTAT.  There  is  no  market 
information system and a FADN has not yet been established. Moreover, a slow pace of development in IACS 
components  (European  Commission,  2019)  vis-à-vis  the  statistical  gaps  that  are  remaining  creates  limited 
capacities for policy monitoring. In addition, unlike in other WB countries, Albania does not yet have a functioning 
economic analysis unit of its MARD (FAO, 2018). 

2.3. 

Socioeconomic issues underlying rural areas 

In Albania, since 2011, the urban population has been larger than the rural population, indicating that there has 
been significant demographic change since the early 1990s. Since 2012, there has been no classification used for 
rural areas in Albania. Owing to this limitation, INSTAT has not provided data with a rural–urban division since 
2012. However, INSTAT’s methodological publications indicate that rural areas can be denominated according to 
settlement patterns, defined through population density. According to INSTAT, rural areas can be classified using 
three approaches: (i) based on the type of cluster (contiguous grid cells of 1 km2), (ii) based on the degree of 
urbanisation (local administrative unit (LAU) level 2 areas) and (iii) based on a division of urban–rural typologies 
using Nomenclature of Territorial Units for Statistics (NUTS) level 3 regions. 

The approach based on the type of cluster (contiguous grid cells of 1 km2) characterises rural areas as those with 
a population density of less than 50 000 inhabitants per km2. Based on this classification, INSTAT assesses through 
the  population  census  that  42 %  of  the  Albanian  population  are  rural-based  inhabitants  (INSTAT,  2020). 
Regarding  regions,  according  to  INSTAT  data  (INSTAT,  2014)  and  based  on  the  new  EU  typology  for  NUTS 3 
statistical regions, only the area of Tirana is an urban or predominantly urban area, where the rural population 
is less than 20 % of the total population. More than two quarters of the population resides in predominantly and 
significantly rural areas. For the rural population proportions in other regions, see Figure 17. 

35 

 
 
 
In  2018,  the  at-risk-of-poverty  threshold  (i.e.  the  percentage  of  individuals  with  incomes  below  60 %  of  the 
median equalised income), according to the EU Statistics on Income and Living Conditions (EU-SILC), was 23.4 %. 
Severe material deprivation (i.e. the percentage of the population with an enforced lack of at least four out of 
the nine material deprivation items) is estimated to be 38.3 %.  

The  Gini  inequality  index  (i.e.  the  statistical  dispersion  used  to  represent  the income  inequality as frequency 
distribution  between  segments  of  population  within    a  nation)  is  35.4 %  for  year  2018.  No  rural–urban 
disaggregation is available for these indicators. Poor infrastructure conditions in rural areas, accompanied by a 
dysfunctional  labour  market,  limited  access  to  services  and  a  poor  business  environment,  should  keep  these 
indicators  at  a  higher  level  than  for  urban  areas.  For  instance,  regional  GDP  estimates  reveal  that  in 
predominantly and significantly rural regions the GDP per capita is 20 percentage points lower than the country 
average.  This  situation  is  expected  to  worsen  in  the  future,  considering  the  reduction  in  GDP  growth  due  to 
COVID-19 (GDP growth was 5 % less in 2020 than in 2019 according to the International Monetary Fund (IMF, 
2020)) and a weakening of safety nets (the number of households subject to economic aid in 2018 was 33 % less 
than in 2017 according to INSTAT). 

Figure 17. Share of rural population by regions in Albania (urban–rural typology, NUTS level 3 regions) 

Source: INSTAT (2014). 

Economic  development  in  rural  areas  within  Albania  is  characterised  by  a  high  dependence  on  agriculture 
production. For instance, the labour force survey of 2018 indicates that 42.3 % of women and 33.5 % of men 
belonging to the age group 15–64 years old are mostly employed in the agriculture sector. The situation is much 
more diversified than in 2013, when 53 % of women and 37 % of men were employed in agriculture (INSTAT, 
2019). Agriculture is also the sector with the lowest gender pay gap in Albania (agriculture has a pay gap of 5 %, 
with the country average being 10 %). 

The business environment  in rural areas is weak. Although there are 16 banks operating in Albania, they are 
hardly present in rural, remote areas. Other, non-banking, institutions (127 institutions) are widespread in rural 
areas, which usually specialise in micro-credit (UN Women, 2016). Under these circumstances, surveys show that 
10 % of the rural population are inclined to use such services. The coverage of information and technology is also 
more limited in rural areas. Less than 10 % of households in predominantly and significantly rural areas have 
access to the internet, while only 28 % of households in rural areas have computers (INSTAT, 2018). 

In terms of education services, resource and capacity limitations are an issue for quality education across  the 
country. Consequently, the education system in rural areas faces additional problems; for example, the European 
Commission  (2019)  showed  there  is  a  difficulty  in  attracting  qualified  teachers  in  rural  areas.  The  Albanian 
demographic  health  survey  for  2018  also  identified  gaps  in  educational  attainment  between  urban  and  rural 
populations, with median years of school completed of 14.4 and 7.5, respectively (INSTAT, 2018). Moreover, the 

36 

 
 
net attendance ratio in rural areas is 8 % point lower than in urban areas for secondary education, slightly more 
pronounced for males. Access to health services is also limited in rural areas compared with urban areas. 

While no official data are provided in terms of health services owing to a lack of rural classification, a few surveys, 
such as Albanian demographic health survey, reveal that the health situation is worse in rural areas. A higher 
proportion of women in rural areas report at least one problem in accessing healthcare (45 %) than women in 
urban areas (26 %) (INSTAT, 2018). 

2.4.  National policy framework 

The agriculture and rural development policy cycle in Albania should reflect a logical link between the ISARD and 
the ARDPF. The ISARD for 2014–2020 is transposed in the action plan(16), which is detailed in the annual action 
plans. The annual action plan is reported by the MARD to the Council of Ministers, that is, to the Department for 
Monitoring  of  Legislation  and  Programmes.  Each  activity  described  in  the  yearly  MARD  action  plan  is  coded, 
assigned to a responsible body and aligned to a specific paragraph in the national plan for European integration 
for 2018–2021. The annual action plan, in line with the ISARD for 2014–2020, provides the framework for setting 
up the ARDPF. It establishes the specific measures available to the agricultural sector in a given year. 

There is a not always a clear link from year to year between the ISARD and the ARDPF. For instance, the ISARD 
for 2014–2020 prioritises policies that promote the development and growth of agricultural production and it 
targets the improvement of competitiveness, the harmonisation of policies and institutional settings with the EU 
acquis, the sustainable use of natural resources and the social inclusion of the rural population. Topic 1.4 of the 
strategy  covers  the  environment,  forests,  water  management  and  biodiversity.  However,  according  to  the 
Albanian  Institute  for  Democracy  and  Mediation  (IDM,  2019),  the  ARDPF  priorities  are  strongly  focused  on 
increasing competitiveness and reducing the structural and institutional shortcomings emerging in agriculture 
and  rural  development.  Other  objectives  described  in  the  ISARD  for  2014–2020  such  as  the  preservation  of 
natural  resources,  balanced  territorial  development,  sustainable  and  inclusive  rural  development  and  issues 
related to quality are not fully promoted in the ARDPF. 

Moreover, the priorities in the ARDPF have not been consistent across years. When analysing the decisions of 
the Council of Ministers (DCMs) that annually settle the ARDPF, there is no consistency observed in the policy 
objectives  set.  The  objectives  sometimes  simply  list  sectors  (beekeeping  was  listed  as  an  objective  in  2018). 
Moreover, risk insurance was a priority in the 2018 programme, while training and knowledge transfer appeared 
as a priority in the 2019 programme. The lack of clearly stated policy objectives has resulted in a low degree of 
policy consistency and unclear relationships between policy measures and policy objectives. 

In the future, it seems that competitiveness will remain a primary concern for policymakers. Based on a policy 
prioritisation exercise in line with the nine objectives of the CAP for 2020–2027 that was undertaken by top-level 
experts  and  policymakers  in  the  framework  of  a  Food  and  Agriculture  Organization  (FAO)  study  focused  on 
Albania (FAO, 2020), participants ranked competitiveness as a primary objective for the future, while the rural 
preservation of natural resources and the landscape and biodiversity were ranked less important (fifth and ninth 
by importance respectively). 

Albania is currently in the initial stages of policy reform. Future policy objectives have been formulated, but new 
policies  and  policy  tools  to  achieve  these  objectives  are  not  yet  in  the  process  of  development.  A  focus  on 
territorial  rural  development  and  rural  diversification  can  be  seen  in  the  implementation  of  the  integrated 
programme for rural development (2018–2020) (17). In this strategy, a strong focus is placed on the sustainability 
of the management of natural resources, promoting diversified economic activities and strengthening capacities 
to improve living conditions. The ARDPF, considering the priorities in this strategy, has set out measures for the 
support of agri-tourism. 

Policy  objectives  related  to  the  sustainable  use  of  resources  in  rural  areas  are  underlined  in  other  strategic 
documents, including those related to water, land and forests, namely (i) the Albanian national land consolidation 
strategy, approved by DCM  No 700, dated 12 October 2016; (ii) the draft  strategy  for irrigation and drainage 
(2018–2030); (iii) the national strategy on climate change and national plans for greenhouse gas mitigation and 
adaptation to climate change; and (iv) the national strategy of integrated energy and climate (18). These policy 

(16)  Another action plan was drafted but not adopted in 2016 (building on the previous plan for 2016-2018). 
(17)  DCM No 21, dated 12 January 2018, focuses on the design of an integrated programme for rural development of 100 villages. 
(18)  This was developed after following Republic of Albania’s attendance at the ministerial meeting of the Energy Community (December 

2017). 

37 

 
                                           
objectives also have a legal basis provided by (i) the draft law on local action groups; (ii) the law on climate change 
(DCM No 499, dated 17 July 2019); and (iii) DCM No 21, dated 12 January 2018,  focusing on the design  of an 
integrated programme for rural development of 100 villages. 

Measures and budgetary support for agriculture and rural development 

Budgetary support for agriculture in Albania fluctuated between 2017 and 2019. In 2019, support reached 1.6 % 
of  GVA,  with  EUR 40.4 million  allocated  to  agriculture  (Figure 18).  It  can  be  assumed  that,  at  this  level,  this 
support does not provide enough assistance to Albanian farmers to face market competition (from producers 
from the EU or other WB countries enjoying higher support), to meet specific needs and challenges in rural areas, 
and to fulfil accession requirements in the near future. Albania is far from the de minimis principle, which states 
that candidates’ agricultural budget should amount to at least a third of the funds that a country can expect from 
the EU upon accession, or at least 10 % of agricultural output (see Volk et al., 2019). 

Figure 18. Level of budgetary support for the agri-food sector  in Albania during the period 2010–2019 

o
r
u
E
n
o

i
l
l
i

M

50

40

30

20

10

0

2,5

2

1,5

1

0,5

0

A
V
G

f
o
%

2005 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Budgetary support for agriculture (million EUR)

Portion of budgetary support to GVA (%)

Source: AL APMC database (2020), AL StatDatabase (2020). 

Figure 19  presents  the  structure  of  agricultural  support  according  to  the  three  pillars.  From  2017  to  2019, 
Albania’s  support  structure  remained  heavily  oriented  towards  structural  and  rural  development  measures 
(second pillar). Unlike in other WB countries, market and direct producer support (first pillar) is of the lowest 
importance in Albania. Approximately 80 % of Albania’s financing is based on national sources. A large increase 
in  the  proportion  of  international  funds  was  observed  in  2016,  when  international  and  IPARD-like  funds 
accounted  for  30 %  of  the  financing.  Some  of  that  financing  enabled  additional  investments  for  the 
modernisation of farms and the agri-processing sector. 

Figure 19. Composition of budgetary support for the agri-food sector  in Albania during the period 2010–2019 

o
r
u
E
n
o

i
l
l
i

M

50,0
45,0

40,0
35,0

30,0
25,0

20,0
15,0

10,0
5,0

0,0

Other
measures
related to
agriculture

Structural
and rural
developme
nt
measures
Market and
direct
producer
suport
measures

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Source: AL APMC database (2020). 

38 

 
 
 
 
 
 
 
 
Direct producer support is at a relatively modest level in Albania, but has been rising since 2012, although with 
some  slow-down  in  2016–2018  (Figure 20).  In  2019,  the  share  of  total  support  made  up  of  direct  payments 
increased again, but the number of sectors subject to this type of support reduced to five. Considering these 
trends, Albania has the lowest level of direct support among the WB countries (not exceeding EUR 5 million). 
Direct support in Albania during recent years has included payments based on the input used (e.g. the amount 
of plastic used wraps replacement for greenhouses and tunnels used), payments based on output (milk, fruits 
and  vegetables)  and  payments  based  on  number  of  animal  (sheep,  dairy  cows,  bees).  Direct  support  is  not 
conditional on any CAP-like cross-compliance. No area payments are provided for Albania (as is the case in other 
WB  countries)  and  no  decoupled  payments  have  been  designed  (as  the  CAP  urges)  owing  to  the  limited 
development of IACS components. The 2019 Albania report by the European Commission noted that there has 
been limited progress in building these systems (European Commission, 2019). 

The funding for structural and rural development measures (second pillar) has been increasing in Albania since 
2015, reaching nearly EUR 30 million in 2018 (Figure 21). Given Albania’s significant challenge in adjusting farm 
structures, the country’s lack of competitiveness and the high pressure for alternative incomes in rural areas, the 
broadening of the second pillar in terms of the level and scope of funding seems to be a rational approach. At 
the same time, and given the inevitable budget constraints, spending in the first pillar needs to take the forms 
that are most effective and efficient in achieving the income support objectives and hence needs be well targeted 
to the farm households in need and the sectors with the highest growth potential. 

Figure 20. Market and direct producer support in Albania during the period 2010–2019 

o
r
u
E
n
o

i
l
l
i

M

6

5

4

3

2

1

0

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Mix
direct
support

Disaster
and other
compens
ations
Input
subsidies

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: AL APMC database (2020). 

The provision of investment grants for upscaling the quality and improving the safety of the products along the 
value  chain  should  address  the  current  challenges  related  to  resource  use  and  technology  absorption.  The 
priority  should  still  be  those  subsectors  that  are  oriented  towards  exports  and  have  the  largest  market 
orientation.  The  attention  paid  to  diversification  activities,  besides  the  presence  of  measure  7  of  the  IPARD, 
remains low owing to the limited availability of small grants for activities beyond rural tourism. 

Almost all of the funding for the second pillar was allocated for the improvement of competitiveness of the agri-
food sector and, more specifically, for on-farm investments. There is no measure for environmental and societal 
services. The lack of payments for areas with natural constraints (19), where production conditions are extremely 
unfavourable, remains to be addressed (Volk et al., 2019). Rural areas and areas with natural constraints should 
be defined according to the existing methodologies in EU countries. In the framework of the integrated rural 
development  programme  for  100  villages,  within  the  spectrum  of  investments  related  to  infrastructural 
improvements and rural diversification, a measure was introduced for the establishment  or reconstruction of 
spaces for rural tourism and investments in agri-tourism,  which  could be considered in the broader group of 
measures  and  funding  supporting  rural  population  resilience  and  for  reviving  rural  areas.  With  these  few 
exceptions in the last 2 years of the period analysed, there are no measures related to the rural economy and 
population. 

(19)  The SWG has made prior attempts to focus on these areas (see SWG, 2017). 

39 

 
 
 
                                           
 
 
Although  LEADER  is  obligatory  only  under  the  European  agricultural  fund  for  rural  development  (EAFRD), 
candidate countries are encouraged to use this approach and establish local action groups to comprehensively 
integrate local needs and solutions. Furthermore, it helps to reinforce the links between rural, urban and fisheries 
areas. Despite the good progress made in terms of the drafting of the law during 2018, the draft has not been 
adopted and no positive development has been witnessed so far. 

Figure 21. Budgetary support for structural and rural development during the period 2010–2019 

o
r
u
E
n
o

i
l
l
i

M

35,0

30,0

25,0

20,0

15,0

10,0

5,0

0,0

100%

100%

99%

99%

98%

98%

97%

97%

2010 2011 2012 2013 2014 2015 2016 2017

Miscellaneous

Rural economy
and population

Environment
and societal
services

Competitiveness

2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: AL APMC database (2020). 

In the past, investments were provided in the form of grants or full or partial compensation of interest on credit 
for the construction of buildings and the purchasing of machinery and equipment, irrigation systems, heating 
and plastic covers, etc., in the main sectors, such as orchards, olive growing, vineyards, greenhouses, medicinal 
and  aromatic  plants  (MAPs),  and  dairy.  Currently  investments  are  targeted  at  measures  to  reduce  farm 
production costs related to crop cultivation and certification in the main sectors, such as organic agriculture, the 
olive sector, MAPs, etc. 

The MARD has recently significantly reduced the proportion of the funding given to and the number of measures 
applied to permanent plantations (e.g. orchards), as well as concentrated support for the olive sector (in 2019), 
which later was switched to the dairy sector (2020). The previous measures, such as investments in productive 
structures  (irrigation  systems,  the  planting  and  improvement  of  orchards,  the  planting  of  MAPs  and  the 
expansion of greenhouses) ceased to exist. The support is concentrated in a few sectors, such as greenhouses 
(plastic cover replacements for greenhouses and tunnels), dairy (payments per head and output), beekeeping, 
MAPs and organic certification, as well as tourism. 

A  partial  contribution  has  also  been  provided  by  the  IPARD  programme,  namely  the  IPARD  Like  and  IPARD II 
projects. In the first phase covered by IPARD Like, only measures 1 and 3 was implemented, with expenditures 
of  EUR 1.67 million  and  EUR 2.81 million  in  2014–2016,  respectively.  The  implementation  of  the  IPARD II 
programme  also  includes  measure  7.  The  first  payments  were  made  in  2019  for  a  total  amount  of 
EUR 1.18 million, out of which EUR 0.88 million was EU contributions (measure 1, EUR 0.03 million; measure 3, 
EUR 1.05 million; and measure 7, EUR 0.10 million). 

The importance of other measures related to agriculture (third pillar) increased over the years mainly because 
of the disbursement of funds for donor projects (Figure 22). This pillar retained the second largest proportion of 
the total budget for support in 2010–2019, accounting for 12 % of total support (with the largest allocation in 
2016 of EUR 11 million). Food safety attracted the largest proportion of the funding in the third pillar. The funding 
for the second largest subgroup, namely research and development, advisory and expert services, has remained 
at  around  EUR 2 million  since  2009.  In  the  future,  this  component  is  expected  to  increase  owing  to  greater 
attention from donors to advisory services. 

40 

 
 
 
 
o
r
u
E
n
o

i
l
l
i

M

Figure 22. Breakdown of other measures related to agriculture in Albania during the period 2010–2019 

12,0

10,0

8,0

6,0

4,0

2,0

0,0

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Other general
support
measures

Food safety
and quality
control

Research,
development,
advisory and
expert services

Source: AL APMC database (2020). 

The ARDPF has supported a large number of sectors, but the support for these sectors has not been consistent 
over the years (Table 11). The formulation and implementation of budgetary measures has not been consistent, 
in terms of the number of measures, the sectors supported and the criteria. The final years of the period analysed 
saw  alterations  to  support  measures  (particularly  in  2018)  and  inconsistencies  with  regard  to  policy 
implementation  (particularly  in  2016  and  2017).  In  2018,  there  were  a  large  number  of  measures  (52 
submeasures)  compared  with  2016–2017  (19  measures).  However,  the  number  of  measures  then  radically 
reduced  again  in  2019.  These  decisions  were  based  not  on  monitoring  (ex  ante  or  ex  post)  studies  but  on 
budgetary conditions. Most of the measures under the ARDPF are related to single commodities. In some years, 
certain measures were exempted and certain commodities were not supported, with no clear policy justification. 

Table 11. Agriculture and Rural Development Program sectors and products supported during the period 2017–2019 

Year 

Number 
of 
measures 

Sectors/products supported 

2017 

17 

2018 

52 

2019 

10 

2020 

7 

Five  sectors:  vineyards,  fruits  and  nuts,  MAPs,  livestock  and  beekeeping  and  aquaculture, 
greenhouses 

Twelve  sectors:  fruits,  nuts,  citrus,  MAPs,  olives,  vineyards,  greenhouse  vegetables,  melon  and 
strawberry in tunnels, fishing and aquaculture, production with GlobalG.A.P. certification and other 
certifications, organic production, livestock and its by products and beekeeping 

Five sectors: livestock (cattle and small ruminants), fishery (anchovies and sardines), olives/olive 
oil, beekeeping breeding, rural tourism/agri-tourism/diversification of economic activities in rural 
areas 

Five sectors and one cross-sector: livestock (cattle and small ruminants), greenhouse vegetables, 
organic,  beekeeping  breeding,  GlobalG.A.P.  certification  (vegetable,  fruits  and  MAPs),  rural 
tourism/agri-tourism/diversification of economic activities in rural areas 

Source: Authors own elaboration based on a review of the content of the DCMs. 

Based  on  the  content  of  the  measures,  a  major  impact  is  expected  in  terms  of  competitiveness,  value  chain 
strengthening,  an  increase  in  cooperation  and  an  increase  in  sector  self-sufficiency.  Some  support  measures 
might be also beneficial for the livelihood of the rural population, the diversification of and support for natural 
resources such as the cultivation of orchards and MAPs, the improvement of farm irrigation and beekeeping, 
support for certification (organic, GlobalG.A.P. and ISO 2001 certification) and support for small ruminants. 

The impact of budgetary measures is scarcely studied. A few impact assessment studies have been conducted in 
the last decade. Skreli et al. (2015) focused on an analysis of a government subsidy scheme and its impact on 
farm production capacity, technical efficiency and the use of idle production factors in the olive and vineyard 
sectors of Albania, using the propensity score matching method. The results show that the government subsidy 
scheme  had  a  clear  net  impact  on  production  yields  but  not  on  farm  size.  No  major  impact  was  observed 
regarding the use of idle production factors (farm  employment) or technical  efficiency  (crop yield) level.  The 
results of the study of Gecaj et al. (2018) regarding the support for the MAPs sector suggest that subsidies affect 
the planted area and yields but have no impact on price (a proxy for quality). The FAO (2020) study is one of the 

41 

 
 
 
 
few impact assessment studies carried out in the last decade. According to this study, based on a  quantitative 
and qualitative approach, it was found that, overall, support for new fruit tree plantations has had a clear impact 
in  terms  of  increasing  the  area  under  fruit  trees  and  the  mobilisation  of  otherwise  idle  production  factors. 
Payments for matriculated sheep and goats has motivated farmers to remain in the business and has positively 
affected milk (and meat) yields. Output payments have consolidated chain governance, but farmers have also 
claimed for unfair distribution and lack of access. The impact of rural diversification measures has been rather 
limited, except for specific measures, mainly because the procedures were very demanding, particularly for small 
farmers, and the degree of funding was low. The use of the counterfactual causality approach showed that the 
measures to support greenhouses, dairy farms and orchards have not had a significant impact on employment 
but have had a positive impact on investments, especially in the dairy sector. The grants have lead to an increase 
in farm size (i.e. the number of milking cows) in the dairy sector, while they had no significant effect on the apple 
and greenhouse sectors. Moreover, budgetary measures in these three sectors did not have a significant effect 
in  terms  of  yields  and  incomes,  although  some  impacts  have  been  observed  in  terms  of  farm  structure  for 
orchards. 

The effects of budget support are closely linked to developments in non-financial services that are provided to 
farms  and  agri-business.  The  advisory  service,  despite  reform  efforts (20),  remains  limited  in  terms  of  its 
coverage (21) and in its quality of information. Knowledge gaps and a lack of compliance with food safety and 
quality standards continue to affect market access (especially exports, despite their good performance in recent 
years) and the development of the sector in general (European Commission, 2009). Despite the achievements 
made, further strengthening of the food safety system, including law enforcement and further improvements to 
the laboratory capacity in the field of food safety, remains a must. To succeed in these commitments, there is 
also a need for improved coordination between institutions to advance the approximation and implementation 
of EU legislation. 

2.5. 

EU approximation process 

Albania signed and ratified the stabilisation and association agreement (SAA) with the EU and its Member States 
in  June  2006,  while  an  interim  agreement  entered  into  force  in  December  2006.  The  SAA  was  concluded  on 
31 March 2019. In March 2020, the European Council opened the accession negotiations of EU integration with 
Albania. To speed up the progress, the Government of Albania continues to work based on the national plan for 
European integration for 2020–2021, aiming to reach full legal approximation of the national legislation with the 
EU acquis and align all of its  sectors  with the  standards set  by the  acquis chapters.  Chapter 11 of the  acquis 
defines the agriculture and rural development priorities for acts to be approximated, the institutions tasked with 
drafting/revising the Albanian legal acts, the degree of approximation and the dates of adoption and entry into 
force. 

During  2017–2019,  various  legal  changes  were  carried  out  that  are  reflected  in  the  new  law  that  has  been 
designed, as well as in the preparation of DCMs, minister orders and minister guidance. Albania has adopted the 
law on agriculture and rural development (2007), which was partially drafted in line with the EU acquis (22). This 
law  sets  out  the  policies  and  institutional  framework  for  the  agricultural  and  rural  development  sector.  In 
addition, the ISARD for 2014–2020 (DCM No. 709, dated 29 October 2014) was adopted, which was drafted with 
the support of the EU and the FAO following the good practices outlined in the EU CAP. 

In  the  budgetary  year  2018–19,  the  MARD  launched  the  IPARD  (2018–2020).  A  list  of  the  CAP-like  rural 
development measures is already given in the sssIPARD Programss for 2015–2017 and 2018–2020. Since 2015, 
Albania has benefited from the EU’s IPARD, which aims to coordinate and implement a more integrated policy 
for the development of rural areas. This was implemented mainly in two stages: IPARD I (in the form of IPARD 
Like)  in  2015  and  IPARD II  in  2018.  In  2015,  the  funding  was  provided  for  investments  in  physical  assets  of 
agricultural  holdings  (measure  1)  and  investments  in  physical  assets  concerning  processing  and  marketing  of 

(20)  Following DCM No 147, dated 13 March 2018, on the establishment, organisation and functioning of  regional agricultural extension 
agencies, the public agricultural extension service was restructured and four regional extension agencies were established as subsidiary 
institutions of MARD. These agencies are funded by the state budget and their tasks, areas of service, organisation and functions are 
defined by the DCM. 

(21)  The total number of agricultural extension experts is 241, most of whom are agronomists and zootechnical experts and a small number 

are agricultural economists (for whom there is an increasing need, in order to absorb IPARD and national scheme funds). 

(22)  Law  No 9817,  dated  22 October  2007,  on  agriculture  and  rural  development  has  been  partially  adopted  and  approximates  Council 
Regulation (EC) No 1085/2006 for establishing an IPA (National Plan for European Integration, 2017-2020). Following this law, DCM 
No 709, dated 29 October 2014, for the implementation of the ISARD was also adopted and then amended through DCM No 21, dated 
12 January 2018, for the design of an integrated programme for rural development of 100 villages. 

42 

 
                                           
agricultural,  livestock  and  fishery  products  (measure  3).  In  addition  to  this  funding,  in  2018,  resources  were 
allocated for farm diversification and business development (measure 7). Further efforts are being made, with 
the  help  of  the  German  Development  Agency  (GIZ)  sustainable  rural  development  project,  to  adopt  other 
measures  such  as  measure  4  (agri-environment,  climate  and  organic  farming  measures),  measure  5  (the 
implementation  of  local  development  strategies  through  the  LEADER  approach)  and  measure  10  (advisory 
services). Measure 9, which consists in technical assistance, is expected to be developed beyond 2020. Moreover, 
an additional measure on Forestry is being prepared with the support  of GIZ  Sustainable Rural Development 
(SRD) Programme.  

With respect to other types of support provided by the rural development programme of the CAP, in Albania 
there  has  limited  progress  in  the  adoption  of  such  support.  If  we  compare  the  measures  designed  in  the 
framework of the EAFRD with the measures formulated so far by the ARDPF, it can be seen that, of these 17 
measures, the current ARDPF could quickly implement five measures in the near future. Some measures, such as 
support for areas with natural constraints, have not even progressed as far as the development of definitions (23). 

The pace of legal adoption as regards the establishment of an IACS has been slow. The progress has been stalled 
by  problems  regarding  the  population  of  databases  owing  to  weak  information  systems  and  statistics  in 
agriculture,  non-functioning  farm  and  animal  registers,  and  the  slow  preparation  of  the  LPIS  (European 
Commission, 2018). Moreover, policy monitoring has been weakened by the slow progress of statistical activities, 
the lack of an economic analyses unit and scarce resources for ex ante and ex post evaluation, including for the 
use of the FADN. The animal register has also not been updated properly, limiting traceability, endangering food 
safety and limiting the implementation of livestock farming management policies. 

The level of effort and progress for aligning the legislation with the EU acquis chapter for agriculture and rural 
development  is  relatively  good.  The  European  Commission  report  for  Albania  (European  Commission,  2019) 
states that Albania has achieved ‘good progress’ in Chapter 11 of the acquis and the country has only ‘some level 
of preparation’ in terms of this chapter, which is a slightly better review of the situation than was given in the 
European  Commission  reports  for  Albania  for  2015,  2016  and  2018  (which  reported  that  the  country’s 
preparations were at an early stage for this chapter) (Vurmo, 2019) (24). The evaluation should also consider the 
progress made in achieving the obligations set out in the SAA. Given the efforts made on Chapter 11 of the acquis, 
according  to  analyses  (ACIT,  2019),  this  is  one  of  the  chapters  for  which  Albania  has  a  relatively  positive 
performance record in terms of the accomplishment of SAA targets, with an adoption level of 75 %, which is 
equal  to  that  for  foreign,  security  and  defence  policy  (acquis  Chapter 31),  topped  only  by  that  for  public 
procurement (acquis Chapter 5) and the customs union (acquis Chapter 29). A review of the most recent version 
of the national plan for European integration (2020–2021) indicates that there are only seven remaining legal 
interventions  (one  law,  two  minister  guidance  documents,  one  minister  order  and  three  DCMs).  However, 
Chapter 11 of the acquis is related to other legal efforts that the Government of Albania has to implement, such 
as the reform of land rights, reforms in food safety, etc. Therefore, alignment with that chapter will be difficult 
in the future despite the progress achieved up to now. 

2.6.  Discussion, conclusions and recommendations 

Despite  the  progress  and  the  reforms  made,  various  gaps  still  exist  in  terms  of  the  policy  and  institutional 
requirements for further alignment of Albania’s agriculture and rural development policies with the CAP. The 
ISARD for 2014–2020 has served as a reference for the strategic orientation of the MARD; however, its policies 
have not been fully consistent over the years and are not fully in line with the baseline policy framework. The 
MARD  should benefit from the opportunity given in the framework of designing the ISARD for 2020–2027 in 
terms of addressing the main policy shortcomings and establishing a policy framework. The MARD should carry 
out an overall review of the policy objectives for the sector, considering the preparatory phase for the ISARD for 
2020–2027 and the emerging alignment required from the design of the future CAP. The MARD should make 
best use of preparatory work for the ISARD for 2020–2027 by prioritising policy objectives guided by an exercise 
for linking national policy priorities with the action plan and the ARDFP. 

National policies expressed in the ARDFP measures have not given considerable attention to cover some of the 
key  elements  of  agriculture  and  rural  development  policies,  such  as  those  related  to  the  environment,  the 

(23)   In 2009, a team of SWG researchers prepared recommendations on the definition of areas with natural constraints (see SWG, 2017).  
(24)  The scores used by Vurmo (2019) are as follows: early stage (5), early stage to some level of preparation (4.5), some level of preparation 
(4), moderate to some level of preparation (3.5), moderately prepared (3), good to moderate level of preparation (2.5), good level of 
preparation (2) and well advanced (1). 

43 

 
                                           
promotion of sustainable rural development, territorial development, the maintenance of rural livelihoods and 
support for vulnerable populations, and climate change. There has been a lack of support (resulting from limited 
institutional capacities) for dealing with rural diversification, area-based development and quality promotion. 
Despite the growing attention from the MARD,  separate  measures for the protection of landscapes, valuable 
natural habitats and biodiversity and/or for the promotion of appropriate agriculture practices have not been 
developed. The ARDPF should be thoroughly reviewed to ensure it is in line with CAP by developing schemes that 
support  rural  populations  and  disadvantaged  areas,  protect  the  environment  and  promote  diversification  to 
reduce poverty and to balance the economic development of rural areas. 

The  MARD  has  a  limited  supporting  policy  environment  in  terms  of  institutional  preparation,  as,  despite  a 
professional  and  accredited  paying  agency  having  been  set  up  (which  is  already  established,  namely  the 
Agriculture and Rural Development Agency), it is not yet putting in function a management and control system, 
compliant to IACS, due to absence of a functional Farm Register and Parcel Identification System. IACS elements 
should  be  a  priority,  which  requires  the  following:  (i)  establishing  a  functioning  farm  register  and 
updating/registering  the  animal  register,  (ii)  establishing  a  LPIS  and  a  market  information  system  and  (iii) 
preparing the FADN as soon as possible.  

The MARD should continue to make significant efforts to aligning legal and institutional framework with EU CAP. 
More efforts are needed to include components of the IPARD programme in supporting Local Action groups. 
These  reforms  should  be  accompanied  by  a  strong  awareness  campaign  and  an  intensive  capacity  building 
process.  Moreover,  definitions  and  classifications  of  rural  areas  and  areas  with  natural  constrains  should  be 
formulated  and  put  in  place  accordingly.    Interventions  should  involve  close  coordination  with  the  donor 
community  to  improve  their  legal  and  institutional  basis.  Extra  efforts  should  be  made  in  terms  of 
interinstitutional coordination, including with academia and civil society. 

Policy  design  should  follow  a  standard  policy  cycle  approach,  which  considers  regulation  for  reducing 
policymakers’ discretion by explicitly reflecting the links between strategy vision, strategic objectives, the mid-
term  action  plan,  the  annual  action  plan  and  the  ARDPF.  Changes  to  the  ARDPF  should  be  based  on  impact 
analysis. Capacity building within the MARD should be focused on policy analysis frameworks, based on close 
cooperation with academia. 

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ACIT  (Albanian  Centre  for  Competitiveness  and  International  Trade)  (2019),  Citizen  Monitoring  of  SAA  2009–
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European Commission (2009), Albania 2009 Report, SEC(2009) 1337/3, 35–37, European Commission, Brussels. 

European  Commission  (2018),  Albania  2018  Report,  SWD(2018) 151  final,  65–66,  European  Commission, 
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European Commission (2019), Albania 2019 Report, SWD(2019) 215 final, European Commission, Brussels. 

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INSTAT (2019), Women and Men in Albania 2019, INSTAT, TiranaTiranaTiranaTiraneTirana, Albania. 

INSTAT (2020), ‘Statistical database’ (http://databaza.instat.gov.al/). 

Skreli, E., Imami, D., Jámbor, A., Zvyagintsev, D. and Cera, G. (2015), ‘The impact of government subsidies on the 
olive and vineyard sectors of Albanian agriculture’, Studies in Agricultural Economics, Vol. 117, No 3, pp. 119–
125. 

SWG  (2017),  Areas  with  Natural  Constraints  in  South-East  Europe:  Assessment  and  policy  recommendations, 
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Bonn and Eschborn, Germany. 

UN  Women  (2016),  National  Study  on  Economic  Diversification  for  Women  Living  in  Albanian  Rural  Areas, 
UNWOMEN  Albania,  Tirane,  Albania.  Available  at,  https://www.un.org.al/sites/default/files/UNWomen-
RuralStudy-EN-PRINT_0.PDF. Last visited June, 2021.. 

Volk, T., Rednak, M., Erjavec, E., Rac, I., Zhllima, E., Gjeci, G., Bajramović, S., Vaško, Ž., Kerolli Mustafa, M., Gjokaj, 
E., Hoxha, B., Dimitrievski, D., Kotevska, A., Janeska Stamenkovska, I., Konjevic, D., Spahic, M., Bogdanov, N. and 
Stevović,  M.  (authors),  Ilic,  B.,  Pavloska-Gjorgjieska,  D.  and  Ciaian,  P.  (eds)  (2019),  Agricultural  Policy 
Developments  and  EU  Approximation  Process  in  the  Western  Balkan  Countries,  Publications  Office  of  the 
European Union, Luxembourg. 

Vurmo,  G.  (2019),  The  Uncertainty  (Principle)  of  EU  Enlargement  2015–2019.IDM  Albania,  Tirane,  Albania, 
available  at  https://idmalbania.org/analysis-the-uncertainty-of-eu-enlargement-june-2019/,  last  visited  June 
2021.  

World  Bank  (2018),  World  Bank  staff  estimates  based  on  the  United  Nations  Population  Division’s  World 
Urbanization Prospects: 2018 Revision, World Bank, Washington DC, USA 

45 

 
 
3.  CASE STUDY: BOSNIA AND HERZEGOVINA 

Sabahudin Bajramović (25) and Željko Vaško (26) 

3.1. 

Introduction 

The  policy  institutional  framework  for  the  development  of  the  agricultural  sector  and  rural  development  in 
Bosnia and Herzegovina (BiH) is complex because the policies and goals, as well as the ways in which they are 
implemented, in accordance with the constitutional structure of BiH, are implemented at different administrative 
levels, namely through the state of BiH and via two entities (the Federation of BiH (FBiH) and the Republic of 
Srpska (RoS)), one district (Brčko District of BiH (BD BiH)) and 10 cantons. 

The development of the agricultural sector and rural development in BiH in the period analysed were defined by 
several strategic and programming documents at the state and at entity level. Although the objectives adopted 
in these documents are relevant, they are not strictly followed in the measures adopted or in the scope and 
structure of financing. The system of monitoring and evaluating the degree of  realisation of the strategic and 
programme documents is weak and unsystematic. 

The agricultural policy in both of the BiH entities did not change significantly in 2017–2019. The amount of total 
budget  transfers  remained  the  same  (FBiH)  or  slightly  increased  with  the  continuation  of  support  for  direct 
payments  to  producers.  The  direct  payment  schemes  and  the  number  of  producers  supported  were  almost 
identical throughout the period until 2017. Structural and rural development measures are still not ranked as a 
high enough priority for decision-makers and, in the case of the FBiH, they were completely neglected until 2018. 
It is clear that this approach will have to change for faster progress to be made in the integration processes. 

Currently, the status of BiH is a potential candidate for EU membership, for which it applied in 2016. BiH received 
a questionnaire from the European Commission and responded to the initial questions in 2018 and to additional 
questions in 2019. In terms of EU accession, according to the latest European Commission report (2019), Bosnia 
and Herzegovina is at an early stage of preparation in the areas of agriculture and rural development and fisheries 
and has some level of preparation in the area of food safety, veterinary and phytosanitary policy. 

Although BiH fulfilled the formal conditions for access to IPARD funds at the beginning of 2018 (i.e. establishing 
a  coordination  mechanism  and  drafting  a  rural  development  programme  at  the  state  level),  access  was  not 
gained. Instead of the IPARD programme, as a replacement the EU offered BiH access to the EU4Agri programme, 
in which many IPARD measures (investments in agricultural and food industry, etc.) are present. It should be 
emphasised that the implementation of this programme is the responsibility not of the BiH institutions, but of 
the United Nations Development Programme (UNDP). 

3.2. 

State of the agri-food sector 

Favourable  economic  trends  in  the  international  economic  environment  and  the  strengthening  of  domestic 
demand in 2017–2019 have enabled the continuation of economic growth in BiH. Based on available national 
accounts, it is estimated that, in 2019, BiH achieved economic growth of 2.7 %, which is slightly lower than the 
growth rates in the previous  2 years (2017 and 2018) but  is within the range of the regional average (ASBiH, 
2019). Total GDP has shown a trend of constant growth and, in 2019, it was estimated to be EUR 18.01 billion, 
which is 18 index points more than in 2016 (EUR 15.3 billion). The same trends have been noted when it comes 
to GVA (Table 12). 

After deflationary pressures were interrupted at the beginning of 2017, consumer prices grew, which resulted in 
an annual inflation growth in 2018 of 1.4 % and a noticeable decline of 0.6 % in 2019. Such inflation is strongly 
influenced by two price sections within the consumer price index: food and non-alcoholic beverages (due to food 
prices) and transport (due to oil prices). 

Since  2016,  there  has  been  a  trend  of  constant  growth  in  the  number  of  employees  and  a  decrease  in  the 
unemployment rate. In 2019, the total number of employees amounted to 830 000, which is 3.6 % more than in 
2016 (801 000). 

(25)   Faculty of Agriculture and Food Sciences, University of Sarajevo, Sarajevo, Bosnia and Herzegovina; s.bajramovic@ppf.unsa.ba 
(26)  Faculty of Agriculture, University of Banja Luka, Banja Luka, Bosnia and Herzegovina; zeljko.vasko@agro.unibl.org 

46 

 
                                           
Table 12. Key general statistics of BiH (2010–2019) 
2012 
2010 

2011 

2013 

2014 

2015 

2016 

2017 

2018 

2019 

Population 
(thousand 
inhabitants) 

Population  density 
(inhabitants/km2) 

GDP 
(at  current 
prices, million EUR) 

GVA 
(at  current 
prices, million EUR) 

Economic  growth 
(real 
in 
GDP, %) 

change 

GDP  per 
(EUR) 

capita 

GDP  per  capita  in 
PPS (EU=100; %) 

Inflation (%) 

Total  employment 
(thousand 
persons) 

Unemployment 
rate (%) 

Total  export  of 
goods 
(million 
EUR) 

import  of 
(million 

Total 
goods 
EUR) 

External 
balance 
EUR) 

trade 
(million 

as 

a 
Trade 
proportion  of  GDP 
(%) 

3 843 

3 840 

3 836 

3 531 

3 526 

3 518 

3 511 

3 504 

3 496 

3 488 

75.1 

75.0 

74.9 

69.0 

68.9 

68.7 

68.6 

68.4 

68.3 

68.1 

12 570 

13 130 

13 117 

13 445 

13 961 

14 592 

15 287 

16 121 

17 100 

18 012 

10 346 

10 727 

10 685 

11 078 

11 487 

12 028 

12 605 

13 293 

14 593 

15 359 

0.8 

1.0 

–1.2 

1.6 

0.6 

3.0 

3.1 

3.2 

3.6 

2.7 

3 271 

3 420 

3 419 

3 808 

3 959 

4 148 

4 354 

4 601 

4 891 

5 425 

30 

2.1 

30 

3.7 

30 

2.1 

31 

30 

31 

21 

32 

–0.1 

–0.9 

–1.0 

–1.1 

1.2 

31 

1.4 

: 

0.6 

843 

816 

814 

822 

812 

822 

801 

816 

822 

830 

27.2 

27.6 

28.0 

27.5 

27.5 

27.7 

25.4 

20.5 

18.4 

15.7 

3 628 

4 204 

4 018 

4 285 

4 439 

4 595 

4 815 

5 821 

6 268 

6 069 

6 962 

7 938 

7 799 

7 756 

8 283 

8 105 

8 263 

9 432 

10 018 

10 163 

–3 334 

–3 734 

–3 781 

–3 471 

–3 844 

–3 510 

–3 448 

–3 611 

–3 750 

–4 094 

84.2 

92.5 

90.1 

89.6 

91.1 

87.0 

85.6 

94.6 

95.2 

90.6 

tobacco 

beverages 
in 
household 

Food, 
and 
total 
expenditures (%) 

: 

: 

: 

: 

41.3 

41.6 

41.2 

40.9 

40.7 

40.8 

:, no data available; PPS, purchasing power standards. 

Note: The total area of BiH is 51 197 km2. 

Source: ASBiH,Gross domestic product - Production approach; Central Bank of BiH, Annual reports, Eurostat, GDP per capita in PPS.;  

The unemployment rate decreased from 25.4 % in 2016 to 15.7 % in 2019. In BiH, the trend of growth in foreign 
trade  continued,  but  the  trade  deficit  also  continued  to  increase.  The  value  of  total  exports  increased  from 
EUR 4.8 billion  (2016)  to  EUR 6.1 billion  (2019)  and  total  imports  increased  from  EUR 8.3 billion  (2016)  to 
EUR 10.2 billion. This resulted in growth of the trade deficit, which in 2019 amounted to EUR –4.1 billion. The 
total coverage of imports by the export of goods in 2019 was 61.7 %. 

Agriculture remains an important sector of the BiH economy, as it contributes significant values in terms of GVA, 
employment rate and trade balance (Table 13). The agricultural sector contributed EUR 1.01 billion GVA in 2019, 
which accounted for 6.6 % of total GVA, which was less than the average of the last 5 years. Agriculture, forestry, 

47 

 
 
hunting and fishery are still very important  when it comes to employment  and, in 2019, the total number of 
employees in this sector was 149 000, which accounted for 18 % of the total number of employees in BiH. There 
are  still  no  official  economic  accounts  for  agriculture  in  BiH.  According  to  information  from  the  Agency  for 
Statistics of BiH (ASBiH), the first official data could appear soon. 

Unfortunately, the agricultural census has not yet been conducted in BiH and the only relevant information is 
the number of agricultural holdings (363 394), which was determined by the last general census in 2013. If we 
take into account the fact that the total agricultural area  used in BiH in 2019 amounted to  1 776 000 ha, the 
average farm has 4.88 ha of UAA. 

Table 13. Key agricultural statistics of BiH (2010–2019) 

2010 

2011 

2012 

2013 

2014 

2015 

2016 

2017 

2018 

2019 

GVA of agriculture, forestry, hunting and fishery 

GVA  (at  current  prices, 
million EUR) 

Proportion  out  of  all 
activities (% of GVA) 

887 

904 

820 

938 

832 

910 

975 

939 

1 006 

1 008 

8.6 

8.4 

7.7 

8.5 

7.2 

7.6 

7.7 

7.1 

6.9 

6.6 

Employment in agriculture, forestry, hunting and fishery 

Number 
persons) 

(thousand 

Proportion  out  of  total 
employment (%) 

166 

160 

167 

155 

139 

147 

144 

154 

129 

149 

19.7 

19.6 

20.5 

18.9 

17.1 

17.9 

18.0 

18.9 

15.7 

18.0 

Trade in food and agricultural products 

Exports  of  agri-food 
products (million EUR) 

out 

Proportion 
of 
exports  of  all  products 
(%) 

Imports  of  agri-food 
products (million EUR) 

out 

of 
Proportion 
imports  of  all  products 
(%) 

Trade  balance  in  agri-
food  products  (million 
EUR) 

288 

318 

317 

351 

338 

430 

499 

540 

450 

435 

7.9 

7.6 

7.9 

8.2 

7.6 

9.4 

10.4 

9.3 

7.2 

7.2 

1 262 

1 404 

1 426 

1 394 

1 396 

1 464 

1 515 

1 611 

1 597 

1 652 

18.1 

17.7 

18.3 

18.0 

16.8 

18.1 

18.3 

17.1 

15.9 

16.3 

–973 

–
1 086 

–
1 109 

–
1 043 

–
1 057 

–
1 034 

–
1 016 

–
1 070 

–
1 147 

–1 216 

Export/import rate (%) 

22.9 

22.6 

22.3 

25.1 

24.2 

29.4 

32.9 

33.6 

28.2 

26.4 

Note: Agri-food trade data according to  Combine Nomenclature of Custom Tariffs (CNCT 1-24). 

Source: ASBiH, GDP - Production approach, Data base of, Chamber of Commerce of BiH;  

Out of the total of 2.2 million ha of agricultural land in 2019, 606 000 ha was utilised arable land (27 %) while 
487 000 ha  remained  uncultivated.  Regarding  other  intensive  areas,  orchards  account  for  101 500 ha  and 
vineyards account for 4 400 ha. The largest part of agricultural land consists of permanent grasslands, pastures 
and meadows and with 1.01 million ha they make up 45 % of the total agricultural area. According to the data 
for  2017,  BiH  gross  agricultural  output  has  a  higher  contribution  from  animal  production,  with  59 % 
(EUR 634.3 million), than plant production, with 41 % (EUR 440.3 million). 

As there are no recent data on the size of farms in BiH, data on the number of registered farms in 2016, which 
were presented by BiH in response to the European Commission’s questionnaire, are presented here. Data on 
the number of farms at the end of 2018 are given on the basis of data from the Ministry of Foreign Trade and 
Economic Relations of BiH.  There is an evident  trend of an increasing number of registered farms (Table 14). 
Because the registration of farms in the farm register is voluntary, the number of registered farms varies, as the 
calculation of whether or not it pays off to be in the register depends on how many subsides farms will receive 
and how much they will have to pay as a result of registration. 

48 

 
 
Table 14. Number and size of agricultural holdings in BiH registered in the farm register  

Year 

FBiH 

RoS 

BD BiH 

BiH 

Number of farms 

2018 

76 003 

42 403 

3 544 

121 950 

2016 

66 998 

33 362 

3 191 

90 092 

Average size (ha) 

2016 

1.58 

4.72 

2.6 

2.96 

Source:  for  2016  Responses  to  the  European  Commission  questionnaire  for  Chapter 11.  Agriculture  and  Rural  Development 
(http://www.dei.gov.ba/dei/direkcija/sektor_strategija/Upitnik/odgovoriupitnik/Archive.aspx?langTag=hr-
HR&template_id=120&pageIndex=2) and for 2018 Annual Report in the Field of Agriculture, Food and Rural Development (2019). Ministry 
of Foreign Trade and Economic Relations of BiH. 

The data in Table 14 show that BiH is dominated by small farms, of which there are more than 100 000, and the 
number  of  agricultural  enterprises  with  the  status  of  joint-stock  companies,  limited  liability  companies  or 
cooperatives does not exceed 1 000. 

In addition to farms registered in the farm register (which are mainly registered for the purpose of exercising the 
right  to  financial  incentives),  there  are  a  number  of  other  farms  that  are  also,  to  some  extent,  engaged  in 
agricultural  production,  mainly  for  their  own  needs.  According  to  the  2013  census,  there  were  363 394 
households  in  BiH  (slightly  less  than  one  third  of  the  total  number  of  enumerated  households)  engaged  in 
agriculture, which is equal to a quarter of those that were registered in the farm register in 2016. According to 
the labour force survey, 129 000 inhabitants of BiH, or 15.7 % of the total population, were engaged in agriculture 
either full time (103 000) or part time (26 000), in 2018 (ASBiH, 2018). Given that an FADN does not exist in BiH, 
there are no relevant data on the economic strength of farms or their revenues, costs and profits. 

Figure 23. Trend in the proportion of arable land that is cultivated in the BiH entities and BD BiH (%, 2010–2018) 

53,5
51,6

49,1

54,9

52,0

47,8

54,5

50,9

47,7

53,4

50,1
48,3

52,0
51,4

48,7

54,3
53,1
51,4

58,3

54,5
52,9

59,7

55,3

52,5

59,8

55,7

52,5

RoS

FBiH

BD BiH

65,0

60,0

55,0

50,0

45,0

40,0

2010

2011

2012

2013

2014

2015

2016

2017

2018

Source: Statistical offices of the FBiH, RoS and BD BiH. 

When it comes to estimating production potential, first a measure of the country’s agricultural land is needed. 
From  official  statistics,  it  can  be  seen  that  close  to  half  of  the  arable  land  in  BiH  has  not  been  cultivated 
(Figure 23). However, the reality is probably somewhat different, because since these data were collected there 
have been changes in the purpose of certain categories of land. 

This mostly refers to arable land, which has reduced in size because some is being used for construction purposes 
and some has transformed into meadows owing to many years of non-cultivation. In addition, the mowing of 
natural meadows stopped, so they turned into pastures, and mountain pastures have been taken over by forest 
vegetation. 

These changes are to a large extent not accompanied by changes in cadastral categorisation, so the only source 
are official data on uncultivated arable land (which are probably overestimated). Regardless, the official data on 
cultivated arable land and gardens at the level of the two BiH entities and the BD BiH are presented in Figure 23, 
where  two  subperiods  are  evident,  the  first  until  2014,  when  there  was  a  trend  of  decreasing  numbers  of 
cultivated areas, and the second from 2015, when the trend reversed and an increase in cultivated areas was 
seen. The lowest cultivation was in 2014, due to the catastrophic floods that hit BiH that year. 

49 

 
 
 
As a consequence of the lack of modern agrotechnics, irrigation systems and quality seed/seedling material, total 
plant production varies from year to year and is primarily the result of the climatic conditions in the country. This 
is especially noticeable in the production of maize, potatoes and vegetables (Figure 24). 

Figure 24. Crop production in BiH (thousand tonnes, 2010–2019) 

Source: ASBiH. 

Average yields vary significantly, even between two adjacent years, owing to the high dependence on weather 
conditions  (Table 15).  Drought,  which  has  been  occurring  frequently  in  recent  years,  halves  expected  yields. 
Irrigation  systems  are  still  lacking,  although  much  is  being  done  to  expand  common  irrigation  infrastructure 
thanks to the credit support of the World Bank and the European Bank for Reconstruction and Development. In 
fruit growing, the cause of reduced yields is late frosts and hail, which occur almost every year. 

Table 15. Average yields in agricultural production in BiH (t/ha) 
2014 

2011 

2013 

2010 

2012 

2015 

2016 

2017 

2018 

2019 

Wheat 

Maize 

Soya 

Tobacco 

2.6 

4.5 

1.9 

1.2 

Potato 

10.4 

Cabbage 

13.8 

Raspberry  7.1 

Grape 

4.0 

Source: ASBiH. 

3.5 

3.9 

1.7 

1.3 

11.0 

13.1 

7.8 

3.8 

3.7 

2.7 

1.4 

1.0 

8.1 

11.1 

5.6 

4.6 

3.9 

4.2 

1.8 

1.2 

10.5 

13.0 

7.2 

6.1 

2.5 

4.6 

1.9 

1.1 

8.7 

3.4 

4.1 

1.5 

1.3 

9.9 

11.8 

12.5 

7.5 

4.8 

8.1 

7.1 

4.3 

6.2 

2.7 

1.6 

11.9 

16.5 

8.4 

7.6 

4.2 

3.6 

1.6 

1.2 

9.6 

12.5 

6.9 

6.3 

4.0 

6.6 

2,7 

1,5 

11.2 

15.0 

7.8 

8.9 

3.8 

6.4 

2.6 

1.3 

11.0 

15.7 

6.7 

9.0 

The  realised  yields  in  BiH  are  lower  than  in  the  neighbouring  countries  Croatia  and  Serbia,  and  they  are  at 
approximately  the  same  level  as  yields  in  Albania,  Montenegro  and  North  Macedonia .  In  animal  production 
(number of animals), there have been slight decreases in the number of animals in almost all types of livestock 
(Figure 25). One of the main reasons for this is cheap imports and insufficient budget support for this subsector. 

Figure 25. Herd size of main livestock in BiH (thousand heads and poultry in million heads, 2010–2019) 

1500

1000

500

0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Cattle
Sheep and goats

Milk cows
Poultry

Pigs

Source: ASBiH. 

50 

 
 
 
 
Organic production in BiH is still modest. According to the Ministry of Foreign Trade and Economic Relations, 
which collects data from all accredited houses for certification of organic  production (27), in 2017 in BiH there 
were a total of 89 producers who fully certified their organic production on an area of 1 145 ha, while there were 
88 ha in the conversion process. This area accounts for only 0.1 % of the total arable land or 0.05 % of the total 
agricultural area. Aromatic and medicinal plants make up the largest proportion of certified organic production 
(61 %), followed by fodder plants with 13 % and cereals and oilseeds with 8 % each (Figure 26). 

Figure 26. Structure of organic crop production in BiH (hectares, 2017) 

Fodder; 145,6; 
13%

Aromatic and 
medical herbs; 
696,6; 61%

Potatoes; 2,4; 
0%

Cereals ; 93,9; 
8%

Oilseeds; 86,8; 
8%

Fruit 
(orchards); 
60,7; 5%

Vegetables; 
59,4; 5%

Source: Database of the Ministry of Foreign Trade and Economic Relations of BiH. 

BiH has an unfavourable trade balance in agri-food products, and BiH is a strong net importer and lacks self-
sufficiency in most products. In 2017–2019, there was a negative trend of growth in the trade balance of these 
products  as  a  result  of  a  decrease  in  total  exports  (EUR 540 million  in  2017,  EUR 435 million  in  2019)  and  an 
increase in total imports (EUR 1.6 billion in 2017 and EUR 1.7 billion in 2019) (Figure 27). 

Figure 27. Agri-food trade of BiH (million EUR, 2010–2019) 

2000

1500

1000

500

0

-500

-1000

-1500

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Exports

Imports

Trade balance

Source: Chamber of Commerce of BiH. 

The sectors having the biggest impact on this decrease are sugars, meat, fats and oils, and milling products. On 
the other hand, the imports of those products (except meat) also decreased from 2017 to 2019. In 2019, total 
exports of agri-food products constituted 7.2 % of total BiH exports, while the total value of imports accounted 
for 16.3 % of total imports in BiH. 

According  to  data  for  2019,  the  largest  proportion  of  imported  agri-food  products  comes  from  EU  countries 
(60.3 %), followed by the WB countries/territories (29.0 %) and other countries (8.4 %) (Figure 28). 

BiH’s  most  important  trade  partners  in  the  EU  are  Croatia,  Hungary  and  Slovenia  and  in  the  WB 
countries/territories are North Macedonia and Serbia. 

(27) 

 A total of nine certification companies have been accredited in BiH: Agreco R. F. Göderz GmbH, Albinspekt, Bio.inspecta AG, Ecocert SA, 
IMOswiss AG, LACON GmbH, ORSER, Organic Control System and Organic Control. The aggregate data of organic production in BiH refer 
to the work/reports of two companies that work only in BiH: Organic Control from BiH and Ecocert SA from France. 

51 

 
 
 
                                           
Figure 28. Regional breakdown of the agri-food trade in BiH (%,, 2010–2019) 

Exports

100%

50%

0%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Turkey

Other countries

EU-27/28

WB

Source: Data base of Chamber of Commerce of BiH. 

Regarding  the  exports  of  agri-food  products,  the  EU  (38.7 %)  and  the  WB  countries/territories  (35.5 %)  have 
equal importance, to which should be added Turkey, which accounts for 15.1 % of total BiH exports of agri-food 
products. In 2019, the most important export partners from the EU were Croatia and Germany and from the WB 
countries/territories were Montenegro and Serbia. 

Institutional,  legislative  and  public  policy  issues,  such  as  environmental  protection,  natural  resource 
management and energy efficiency issues, are exclusively the responsibility of the BiH entities and their relevant 
institutions, while at the state level these issues are covered by the work of the Ministry of Foreign Trade and 
Economic Relations. As a consequence, in BiH, there is no any state strategic document that regulates the issues 
of sustainable development or environmental protection, which are integral elements of the concept of a green 
economy. However, there are several documents whose purpose is to regulate these issues. Activities to achieve 
the sustainable development goals in BiH are ongoing and affect all elements of society, especially through the 
process  of  Euro-Atlantic  integration.  Thus,  BiH  is  committed  to  the  implementation  of  the  millennium 
development goals and, as such, several documents related to sustainable development have been developed, 
such as that prepared following the 2002 World Summit on Sustainable Development in Johannesburg Summit 
or the document entitled BiH in the Rio + Process (2012). 

Although  in  BiH  and  its  entities  there  are  a  significant  number  of  documents  that  are  in  line  with  the 
harmonisation of policy and the legislative framework with EU standards – such as standards on climate change 
and carbon dioxide emissions; environmental protection and waste management; land, air and water protection 
– the degree of harmonisation is still weak, the implementation of existing policies and regulations is insufficient 
and there is a lack of adaptation of mechanisms (taking into account the EU standards) for successful functioning. 

One of the problems of BiH agriculture is the connecting of value chains (i.e. the purchase and processing of 
agricultural products). Buying products from farms  in former Yugoslavia was the responsibility of agricultural 
cooperatives, which, although they still exist  today, are, with rare exceptions, organisationally and financially 
unable to deal with the purchase and sale of agricultural products (28). The collection of agricultural products was 
taken over and organised directly by processors (such as for milk) or by private trading companies (such as for 
fruit and vegetables). The problem is that processors and traders prefer to import raw materials or final food 
products, thus meeting the needs of the domestic market, which is one of the main sources of the high foreign 
trade deficit of agricultural and food products. 

3.3. 

Socioeconomic issues underlying rural areas 

There is no official classification of rural areas in BiH and no official legal act on the basis of which to carry out 
the demarcation of rural areas. Therefore, statistics data are not sorted based on urban and rural areas. However, 
some  scientists  and  projects  are  dealing  with  this  topic  and  most  often  are  using  the  OECD  criterion  on  the 
number of inhabitants per km2 for dividing a certain territory (state, entity, canton or municipality) into rural and 
urban parts. 

(28)   A recent trend that has been developing is the establishment of new cooperatives with a small number of founders from the same family 
or a narrow circle of friends, who practically operate as partnerships, but for some reason the founders opted for the organisational 
form of the cooperative. 

52 

 
 
 
                                           
In the RoS, the first such designation was undertaken when preparing the rural development strategy of the RoS 
in 2010. The demarcation was then undertaken at the municipal level (which corresponds to LAU level 1 in the 
classification  area),  which  found  that  95 %  of  the  territory  of  RoS  had  a  population  density  of  less  than  150 
inhabitants (i.e. meeting the condition to be a rural area) and that 83 % of the population lived in rural areas 
(Mirjanić et al., 2010). Recently, a newer classification was carried out applying a more complex methodology, 
stemming from the perspective that municipalities are too large as geographical areas and a that lower territorial 
subdivision is necessary to identify rural areas. In this case, the level of demarcation led to the lowest level of 
settlements (which corresponds to LAU level 2). On that occasion, it was determined that 5.4 % of the territory 
of the RoS was urban and 58.7 % of its total population lived in urban areas. In contrast, 94.6 % of the RoS was 
found to be rural, with 41.3 % of the population living in rural areas (Zubić et al., 2019). However, it should be 
noted that this is not an officially recognised classification, but an expert analysis based on the application of the 
OECD methodology, which gives the results scientific validity. 

In  the  FBiH,  there  is  no  official  demarcation  of  rural  areas,  so  the  only  classification  is  within  scientific 
publications.  According  to  Muminović  (2013),  based  on  the  OECD  typology  and  criteria  for  defining  rurality 
(municipalities with a population density of fewer than 150 inhabitants/km2), it was determined that out of the 
79  municipalities  in  the  FBiH,  56  were  considered  rural.  A  detailed  calculation  determined  that  rural  areas 
covered 85.1 % (22 213 km2) of the territory of the FBiH and that 49.6 % (1.16 million inhabitants) of the total 
population of the FBiH lived in rural areas. 

Regardless  of  the  absence  of  an  official  division  of  the  territory  of  BiH  into  urban  and  rural  areas,  some 
institutions  publish  certain  data  classified  according  to  this  criterion.  For  example,  Goss  (2012),  for  the  rural 
household survey, divided the territory and population of BiH into predominantly urban (>100 inhabitants/km2), 
semi-urban (50–100 inhabitants/km2) and rural areas (<50 inhabitants/km2) based on population data before 
the first census in BiH, after its independence. The UNDP stated that, in BiH, 61 % of the population lives in rural 
municipalities and, on the basis of this division, it continues to monitor a  number of indicators based on the 
rural–urban criteria, concluding that there are only small differences in the size of the two areas (UNDP, 2013). 

Based  on  the  own  processing  of  the  2013  census  data,  taking  the  level  of  the  municipality  as  the  dominant 
territorial unit, it was determined that rural areas in BiH cover 91.94 % (47 010 km2) of the country and that 
67.05 % (2.33 million inhabitants) of the total population live in rural areas. The population density in rural areas 
of BiH is 49.5 inhabitants/km2, which is 37 % less than the national average (68 inhabitants/km2). 

Rural areas are exposed to intensive depopulation, for many reasons. The World Economic Forum ranked BiH 
140th out of 144 countries in terms of the countries with the least to most brain drain (Council of Ministers of 
BiH and Directorate for Economic Planning, 2019). The elderly population in rural areas is heavily dependent on 
remittances sent to them by younger family members. According to the World Bank, BiH has received between 
USD1.8 and 2.2 billion in the last decade on the basis of remittances from abroad, which in 2019 amounted to 
10.9 % of its GDP (World Bank, 2019). 

Unfortunately, in BiH there is no statistical monitoring of demographic trends using the urban–rural divide, given 
that the territory of BiH (i.e. its entities and BD BiH) has not been divided in this way. Labour force surveys provide 
some demographic data, but this is only general for BiH and these surveys do not allow for the consideration 
data only for rural areas. 

Compared to the last census (2013), the total number of inhabitants in BiH is slightly declining. Over 5 years, the 
number of inhabitants decreased by 35 000 or 1 % (ASBiH, 2018). The number of employees in agriculture was 
around 18 % of the employed labour force over this period (29). 

(29)   Based on the labour force surveys for the corresponding years. 

53 

 
                                           
Figure 29. Rural and urban areas of BiH at the local level 

Source: Own calculations based on Population Census data published by ASBiH 

The total active and non-active population is around 2.7 million people and is declining. The number of employed 
people  is  growing  slightly,  and  the  number  of  unemployed  people  is  declining  faster.  The  faster  decline  in 
unemployment is likely (although there is no exact evidence) to be the result of the more intensive migration of 
workers from BiH to the EU, following the liberalisation of the work permitting process. The activity rate of the 
total population is 42–43 %. Males are more active than females, among both the employed and the unemployed 
labour force. In terms of education levels, 37 % of the workforce has only a primary school education, 53 % have 
completed secondary school and 10 % have a higher education. Among both the employed and the unemployed 
population, the majority have a secondary school education (ASBiH, 2018). 

3.4.  National policy framework 

The development of the agriculture sector and rural development in BiH in the period analysed was defined by 
four strategic documents: (i) the strategic plan of rural development of BiH (2018–2021) framework documen 
(Council of Ministries of BiH, 2018)t, (ii) the strategic plan for the development of agriculture and rural areas of 
RoS for 2016–2020, (iii) the medium-term strategy for the development of the agricultural sector in the FBiH for 
2015–2019 (Federal Ministry of Agriculture, Water Management and Forestry, 2014) and (iv) the programme of 
rural development of the FBiH for 2018–2021. 

The first strategic document for the agriculture sector and rural development in BiH was adopted in 2018 with a 
validity period of 4 years (2018–2021). The strategic plan of rural development of BiH (2018–2021) defines six 
strategic  goals:  (i)  ensuring  income  stability  and  equalising  business  conditions  with  the  surroundings,  (ii) 
strengthening the competitiveness of agriculture, forestry and rural areas by increasing the level of investment 
and improving the transfer of knowledge and promoting innovation, (iii) improving the marketability of agri-food 
products by increasing their added value, improving quality and safety standards, and strengthening links within 
value  chains,  (iv)  the  sustainable  management  of  natural  resources  and  adaptation  to  climate  change,  (v) 
improving the quality of life in rural areas through the creation of new sources of income and the improvement 
of physical infrastructure, social inclusion and the accessibility of public services and (vi) improving institutional 
systems and capacities and harmonising the legal framework in the field of agriculture and rural development, 
at  all  levels  of  government  in  accordance  with  constitutional  competencies,  in  the  direction  of  gradual 
approximation  to  the  CAP  (Federal  Ministry  of  Agriculture,  Water  Management  and  Forestry,  2018).  This 
strategic document is mainly a synthesis of the goals from the two entity strategies that were adopted before 
the adoption of this strategic plan. For the realisation of the six goals, 11 measures and 66 submeasures have 
been defined. The adoption of this strategic plan was one of the key conditions for BiH to receive some grants 
for rural development from the EU pre-accession funds. 

54 

 
 
Republic of Srpska 

In  the  RoS,  the  strategic  plan  for  the  development  of  agriculture  and  rural  areas  of  the  RoS  for  2016–2020 
(Ministry of Agriculture, Forestry and Water Management of the Republic of Srpska, 2015) was adopted in 2015. 
This strategic plan sets six strategic goals: (i) increasing the volume and productivity of agricultural production 
and ensuring the stability of the income of agricultural producers, (ii) strengthening the competitiveness of the 
agricultural sector by increasing the level of investment, (iii) increasing the level of marketability and finalisation 
of agricultural production, (iv) the sustainable management of natural resources and the mitigation of climate 
change,  (v)  balanced  integrated  rural  development  and  (vi)  systemic  support  for  the  development  of  the 
agricultural sector and rural areas. The six strategic objectives are further divided into 16 specific objectives and 
52 measures. These objectives are intended to be realised through three policies: (i) a production support policy, 
(ii) a policy of restructuring agriculture and (iii) a rural development policy. Before the end of 2019, the Ministry 
of Agriculture, Forestry and Water Management of the RoS initiated the preparation of a new strategic document 
for 2021–2025. The agricultural cooperative development programme for 2019–2025 was also adopted in the 
period analysed. 

Federation of Bosnia and Herzegovina 

The FBiH has a medium-term strategy for the development of the agricultural sector in the FBiH for 2015–2019 
(Fedearal  Ministry of Agriculture, Water Management  and Forestry, 2014)  whose  validity has been extended 
until the end of 2020 by the conclusion of the FBiH Government. This document defines a strategic framework 
consisting  of  four  strategic  goals  and  37  measures  divided  into  three  groups  that  follow  the  three  pillars  of 
agricultural  policy.  The  strategic  goals  of  the  FBiH’s  agricultural  development  are  (i)  the  development  of  the 
agriculture sector and related sectors through raising the technical and technological level, more efficient use of 
available  resources  and  respect  for  modern  market  requirements,  (ii)  providing  conditions  for  the  stronger 
generation of more stable income within the agricultural sector and quality improvements to life in rural areas, 
(iii) the sustainable management of natural resources and the adaptation of agriculture to climate change and 
(iv) the adaptation of the institutional legislative framework and agricultural policy to the EU CAP respecting the 
level  of  development  of  the  agricultural  sector  of  the  FBiH.  In  addition,  there  is  a  FBiH  rural  development 
programme  for  2018–2021.  The  programme  was  created  to  be  compatible  with  the  IPARD  principles  of  the 
management  of  rural  development  financing  in  the  FBiH,  with  the  intention  of  demonstrating  that  the  FBiH 
Government  is  committed  to  strengthening  its  capacity  to  meet  the  obligations  in  this  key  area  in  the 
approximation  process  as  regards  EU  standards  and  requirements.  Unfortunately,  by  2020,  there  was  no 
parliamentary adoption of this programme and most of the planned measures had not been implemented. The 
five  main  objectives  of  the  programme  are  (i)  increasing  the  competitiveness  of  agricultural  products,  (ii) 
improving  the  environment,  (iii)  strengthening  the  diversification  of  the  rural  economy,  (iv)  supporting  the 
establishment of the LEADER approach and (v) supporting forestry. For the implementation of the programme, 
10  measures  and  14  submeasures  are  envisaged.  Within  the  FBiH,  some  cantons  also  had  agricultural 
development strategies and programmes. 

Brčko District of Bosnia and Herzegovina 

The BD BiH did not have strategic documents defining the goals of development of the agricultural sector and 
rural areas in the district in the period analysed (the validity of the last such document expired in 2013). The FAO, 
in cooperation with the Department of Agriculture of the BD BiH, developed a new strategic document in 2018, 
namely the strategy for the development of agriculture and rural areas of the BD BiH for 2019–2025 (FAO, 2018),, 
which, unfortunately, has not yet been adopted. This document defines four general objectives: (i) improving the 
sustainability and competitiveness of agriculture and food processing, (ii) providing support  through advisory 
services and technology transfer to agriculture and agricultural processing, (iii) improving quality of life through 
social  inclusion,  poverty  reduction  and  balanced  economic  development  through  investment  activities  and 
income  diversification,  including  tourism,  and  (4)  restoring,  preserving  and  improving  ecosystems  that  are 
dependent on agriculture and forestry. 

Although all administrative levels had valid strategic documents, the institutions in charge of agricultural and 
rural  development  were  largely  not  guided  by  the  objectives  and  measures  defined  by  these  documents. 
Therefore, the need for and benefits of drafting such documents is called into question. The policy for financial 
support for agriculture did not follow the strategic commitments, neither in scope nor by structure, and many 
other goals were not met at all or were the target level. 

55 

 
3.5.  Measures and budgetary support for agriculture and rural development 

BiH and its entities have a clear commitment to European integration, as confirmed by the strategic documents 
that began the process in 2014 (FBiH) and 2015 (RoS) (Bajramović et al., 2016). These strategic documents for 
the development of agriculture and rural areas of both BiH entities were due to expire in 2020, so in 2019 their 
results and impact on the development of the sector could already be seen. The general impression is that, in 
both  BiH  entities,  the  necessary  motivation  for  reform  has  been  lacking  and  the  steps  required  to  approach 
harmonisation  with  the  EU  CAP  have  not  been  taken.  There  was  no  planned  increase  in  total  budgetary 
expenditures for the sector. A significant amount of the direct payments intended for producers on the basis of 
output was retained. There was no significant support for structural and rural development measures and there 
were no significant changes to general support for agriculture regarding research, advisory services or food safety 
issues. 

The total budget for agriculture in BiH has constantly been increasing since 2014, when it was at its lowest level 
(EUR 67.4 million), and in 2019 it reached its highest value of EUR 86.6 million. In the budget for 2019, the largest 
element  (EUR 74.8 million,  namely  86.3 %)  is  made  up  of  direct  support  measures  to  producers;  rural 
development  measures  were  allocated  EUR 6.7 million  (7.7 %)  and  general  measures  in  agriculture  were 
allocated EUR 5.2 million (6.0 %). 

In the FBiH in 2017–2019, the total budget allocations (at the level of the Federal Ministry of Agriculture, Water 
Management and Forestry and the cantons) remained consistent at around EUR 44 million. The main feature of 
agricultural policy throughout the implementation period of the medium-term strategy is the exclusive support 
given to producers through direct payments until 2018, with a complete lack of support for rural development. 
Only in 2018 and 2019 was EUR 0.75 million per year allocated for rural development measures at the level of 
the Federal Ministry of Agriculture, Water Management and Forestry, which was far below the amounts planned 
by  the  strategy.  Owing  to  the  large  debt  left  to  the  beneficiaries  by  the  previous  minister  (a  debt  of  around 
EUR 23 million),  in  addition  to  regular  support  related  to  current  agricultural  production  (direct  payments), 
gradual payments of debts from the previous period were made in 2015–2019. Thus, in 2015–2017, the total 
available annual budgetary support of about EUR 35 million was exclusively spent on the direct payments for the 
years in question and on the payment  of the above-mentioned previously incurred debt. The increase in the 
budget for support for agriculture and rural development planned in the medium-term strategy for 2015–2019 
was missing, but budget allocations were maintained at an annual rate around EUR 40 million. In that period, 
there was no allocation for rural development at all. Small amounts for all three pillars of agricultural policy were 
realised at the cantonal level. 

In  the  RoS,  the  total  budget  allocations  in  2018  and  2019,  with  the  value  of  about  EUR 36 million,  increased 
slightly compared with the previous period, when they averaged EUR 30 million. Direct support measures for 
producers were the most prevalent support measure in this entity (making up about 80 % of the budget), but, 
unlike the FBiH, the allocations for second pillar measures were higher, which in 2018 and 2019 made up about 
7–10 % of the total budget. Like in the FBiH, the strategy lacked significant support for development in this entity. 
For other measures related to agriculture, EUR 3.8–4.6 million was allocated annually, making up about 13 % of 
the total budget allocations. 

In  the  BD  BiH,  there  was  a  significant  increase  in  total  budget  allocations,  from  EUR 1.8 million  in  2014  to 
EUR 7.1 million  in  2019.  The  support  structure  was  maintained,  with  direct  support  to  producers  the 
predominant measure and rural development measures allocated 9–14 % of the budget. There were no other 
types of support for the agricultural sector in this BiH administrative unit. 

Direct producer support measures 

3.5.1.1. 

Federation of Bosnia and Herzegovina 

Direct producer support measures were the most significant budget support measures, which were maintained 
at the level of EUR 41–43 million, in 2017–2019 (Figure 30). Most of the direct payments were based on output 
(59.6 % in 2018, 50.9 % in 2019), with the payment of the largest part of this support going to milk producers 
(per litre of purchased milk). A smaller part of this direct support was based on payments per hectare or head in 
terms  of  the  value  of  measures.  Namely,  in  2019,  except  for  payments  for  milk  (per  litre)  and  payments  for 
planting material (per piece), all other direct payments were per hectare or head. In 2018 and 2019, the payment 
scheme  was  maintained  with  equal  amounts  of  support  and  uniform  award  criteria.  The  largest  amount  of 

56 

 
support  was  given  to  milk  producers,  which  in  2019  amount  to  EUR 23.2 million,  making  up  more  than  half 
(52.6 %) of the total direct support given to producers. 

3.5.1.2. 

Republic of Srpska 

Direct producer support measures are the most important support measures of agricultural policy in this BiH 
entity. In 2017–2019, these measures ranged from EUR 25.5 to 28.6 million (Figure 30), with almost two thirds 
paid based on output (66.3 % in 2019, 65.2 % in 2017). In addition to milk, the direct payment schemes based on 
output also included the production of fruits and vegetables and the production of seed/seedling material. A 
significant difference between the RoS makes and the FBiH is the support for variable inputs that the former gave 
in  2017–2019,  which  amounted  to  between  EUR 2.3  and  4.0 million,  namely  8.5–14.8 %  of  the  total  direct 
support to producers. 

Figure 30. Structure of direct producer support measures in BiH (%) 

Federation of BiH

Republic of Srpska

45
40
35
30
25
20
15
10
5
0

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

Brčko District

BOSNIA AND HERZEGOVINA

100
90
80
70
60
50
40
30
20
10
0

50

40

30

20

10

0

8

7

6

5

4

3

2

1

0

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

Market and direct producer support measures

Structural and rural development measures

Other measures related to agriculture

Source: BA APMC database (2020). 

Compared  with  2018,  in  2019,  new  direct  support  measures  for  producers  were  introduced  in  the  form  of 
premiums related to the production of buckwheat, aromatic and medicinal plants, seed material and tobacco 
and input subsidies for domestic hybrid maize seeds. In 2019, compared with 2018, the total support for milk 
producers decreased, but this type of support remained the most dominant among all direct support measures 
(amounting to EUR 14.7 million, namely 41.3 % of total budget support). 

57 

 
 
 
3.5.1.3. 

Brčko District of Bosnia and Herzegovina 

In this BiH administrative unit, the most dominant group of measures are direct payments per hectare or head 
(there are no direct payments based on output). A large number of plant and animal producers are supported 
and payment schemes have remained mostly the same in the last 3 to 4 years. The positive aspect of support in 
this region is the continuity of growth since 2014. In 2019, a new measure of support was introduced, namely 
support  for    fish  production  was  introduced  as  a  continuation  of  support  in  2018  for,  for  the  first  time,  the 
procurement of juvenile fish. 

Structural and rural development measures 

3.5.1.4. 

Federation of Bosnia and Herzegovina 

One  of  the  biggest  weaknesses  in  the  implementation  of  the  strategic  (programme)  document  for  the 
development  of  the  agricultural  sector  in  2015–2019  was  the  absolute  imbalance  between  planned  and 
implemented  measures  to  support  rural  development.  Namely,  there  was  almost  no  budget  support  for  the 
second pillar and for rural development measures from the Federal Ministry of Agriculture, Water Management 
and Forestry in the entire implementation period; from 2014 to 2017, this pillar had no budgetary support and, 
in  2018  and  2019,  the  support  was  modest,  amounting  to  EUR 0.75 million  (Figure 31).  In  the  strategy,  it  is 
planned  that,  in  2019,  the  budgetary  support  ratio  of  direct  payment  measures  and  structural  and  rural 
development measures would be 55 %:45 %, with a budget of about EUR 70 million. Instead, the ratio that year 
was 95 %:5 %, with a budget of EUR 44 million. This is certainly a part of the agricultural policy that will have to 
change in the next cycle in 2021–2027. A smaller amount of support for rural development is coming from the 
federal level than from the cantonal level (EUR 2.3 million in 2019). Budgetary transfers mainly aim to improve 
competitiveness and support investments on farms (for the procurement of machinery, the procurement of basic 
livestock and equipment for establishing plantations), whereas support is lacking for environmental measures 
and measures to improve the rural economy. 

3.5.1.5. 

Republic of Srpska 

Compared with 2017, when the budget support for rural development amounted to only EUR 0.8 million, the 
budget increased significantly in the following 2 years to EUR 2.7 million in 2018 and EUR 3.6 million in 2019. 
Nevertheless, this increase is far from the strategically set goals when it comes to the second pillar of agricultural 
policy.  As  in  the  FBiH,  structural  and  rural  development  measures  are  strategically  recognised  as  the  most 
important  development  measures,  and  the  budget  structure  at  the  end  of  the  strategy’s  implementation  is 
planned to have a 60:40 ratio between direct support measures and rural development measures. 

58 

 
Figure 31. Proportion of structural and rural development measures in BiH (%) 

Federation of BiH

Republic of Srpska

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

District Brčko

BOSNIA AND HERZEGOVINA

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

Competitiveness

Environment and societal services

Rural economy and population Miscellaneous

Source: BA APMC database (2020). 

The analysis of the budget from 2019 shows that a ratio of 88:12 was reached and that it will take a long time to 
reach the planned goal. In 2019, there was a wide range of measures that were within the framework of rural 
development,  with  the  largest  proportion  being  so-called  capital  investment  measures,  namely  measures  to 
increase  competitiveness  (e.g.  the  procurement  of  machinery,  establishing  basic  herds  and  raising  orchards). 
Environmental  measures  are  very  modest  and  relate  to  support  for  organic  production,  while  measures  to 
improve  the  rural  economy  have  make  up  a  slightly  larger  proportion,  consisting  primarily  of  measures  to 
improve infrastructure, especially in 2017. 

3.5.1.6. 

Brčko District of Bosnia and Herzegovina 

Structural and rural development measures have a very modest budget, which in 2017–2019 was EUR 0.7 million 
per  year.  This  measures  aim  to  improve  competitiveness  (e.g.  investments  in  mechanisation  and  other 
equipment, irrigation systems and raising new orchards). 

Third pillar measures and general measures in agriculture are completely neglected in the BD BiH, and in the 
FBiH this type of support is very modest and ranges from EUR 0.2 to 0.6 million. In the RoS, support for general 
agricultural measures in 2018 and 2019 amounted to EUR 4.6 million and accounted for almost 13 % of the total 
budget allocated to the agricultural sector (Figure 32). 

The main conclusion regarding the analysis of the structure of measures and budget support to the agricultural 
sector at the level of both BiH entities is unequal support in favour of direct payments, insufficient understanding 

59 

 
 
of  the  importance  of  rural  development  measures  and  structural  measures  among  decision-makers, 
unwillingness for more serious reforms. In both BiH entities direct payments based on output are dominated 
which significantly distances it from the approaching CAP. Finally, the implementation of the Strategy so far has 
shown non-compliance with the set goals. 

Figure 32. Proportion of other measures related to agriculture in BiH (%) 

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Federation of BiH

Republic of Srpska

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

District Brčko

BOSNIA AND HERZEGOVINA

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

R&D and expert services

Food safety

Other general support

3.6. 

EU approximation process 

Source: BA APMC database (2020). 

In 2008, BiH signed a stabilisation and association agreement with the EU, which entered into force in 2015. In 
2016, BiH officially applied for EU membership. In 2018, BiH submitted answers to the European Commission’s 
questionnaire  and,  in  2019,  answers  to  additional  questions.  Chapter 11  referred  to  42  (+18  additional) 
questions, Chapter 12 referred to 44 (+18 additional) questions and Chapter 13 referred to 72 (+13 additional) 
questions, and the answers were given in a 1 000-page document. Currently, BiH has the status of a potential 
candidate for EU membership. 

BiH has received financial assistance from the EU since the end of the War (1992-1995), first for renewal and 
reconstruction,  and  later  for  the  construction  and  improvement  of  infrastructure  and  the  business  and 
institutional environment within the IPA programme. BiH receives significant EU assistance for capacity building 
in agriculture, rural development, food security, veterinary medicine and phytosanitary protection. Regarding 
direct pre-accession assistance for agriculture and rural development (through the IPARD), this priority sector 
was  not  covered  by  financial  assistance  from  the  IPA II  programme  in  2014–2020  owing  to  non-fulfilment  of 
political and technical conditions. The political condition in question was the adoption of the strategic plan for 

60 

 
 
rural  development  of  BiH  (Council  of  Ministries  of  BiH,  2018)  which  was  adopted  in  2018,  and  the  technical 
conditions were the establishment of the IPARD institutional structure and the improvement of administrative 
capacities for the payment and control of the expenditure of allocated funds. Regarding the establishment of a 
unified administrative structure and agencies for the implementation of IPARD measures, there were differing 
views between the two entities and, therefore, the establishment of this structure was delayed. In 2018–2020, 
the EU made available to BiH certain funds for rural development. These funds are not allocated through BiH 
institutions owing to a lack of accredited bodies; instead, they are allocated through international organisations 
according to criteria similar to those applicable to the IPARD. 

One element of the financial assistance for the agri-food sector and rural development was realised through the 
project  ‘Competitiveness  and  Innovation:  Local  development  strategies  –  EU4business’,  which  is  jointly 
implemented in BiH by the UNDP, GIZ and the International Labour Organization (ILO) through public calls within 
Grant Fund Facility (GFF). This project had EUR 10 million at its disposal in 2018–2019 for four areas, two of which 
were intended for farmers, companies and cooperatives. Project activities related to the agricultural sector, the 
food  industry  and  rural  development  are  implemented  by  the  UNDP.  Projects  focusing  on  21  agricultural 
producers and processors, worth EUR 4.4 million, were selected for co-financing, with a total of EUR 2.1 million 
grants  given  out  during  2019.  For  each  project,  applicants  had  to  provide  a  minimum  of  40 %  of  their  own 
financial contribution, and grants from the GFF could amount to a maximum of 60 %. This project was important 
in terms of providing an opportunity for learning and adjusting to the procedures that would be applied if the 
IPARD mechanism were activated, rather than in terms of the amount of the EU grant, which was more modest 
than was originally announced. 

Owing to the non-compliance with the EU preconditions for the implementation of the IPARD programme and 
the EU’s lack of understanding of the complex institutional and political situation, BiH is also likely to lose its right 
to  the  use  the  IPARD  pre-accession  funds  in  the  next  programming  period  (2021–2027).  In  the  European 
Commission’s analytical report  for BiH  for 2019 (European Commission, 2020), it stated that BiH needs to (i) 
ensure that the 2008 law on agriculture and the acceleration of acquis alignment is properly implemented; (ii) 
adopt  other  state-level  laws  in  the  sector,  such  as  on  wine  and  organic  production;  (iii)  put  in  place  the 
harmonised rural development programmes at the different levels of government in the country; (iv) establish 
the administrative structures required for the CAP, including establishing a paying agency, an IACS and a LPIS; (v) 
establish an FADN; (vi) harmonise country-wide direct payments and gradually align these with EU requirements 
by decoupling direct aid payments from production; (vii) fully align its legislation in this field with the acquis and 
strengthen  administrative  capacity  at  all  levels;  (viii)  improve  and  harmonise  state-level  regulation  of  the 
protection  of  designations  of  origin,  geographical  identifications  and  traditional  names  to  ensure  a  clearer 
distribution of competences between different institutions; (ix) harmonise the regulatory frameworks on organic 
farming  across  different  levels  of  government;  (x)  step  up  efforts  to  ensure  sustainable  resources  for  animal 
disease controls measures in the long run; (xi) improve the animal identification, registration and, in particular, 
movement  control  systems,  including  the  central  database;  (xii)  align  with  the  acquis  and  make  relevant 
amendments to the state-level law on food (from 2004), the law on veterinary medicine (from 2002) and the law 
on  agriculture,  food  and  rural  development  (from  2008);  (xiii)  align  with  the  acquis  the  work  of  official 
phytosanitary  diagnostic  laboratories  and  official  controls  of  imports;  (xiv)  harmonise  genetically  modified 
organism (GMO) legislation across the country and improve its institutional arrangements to avoid an overlap of 
competences and to strengthen its control and coordination chain; and (xv) adopt a country-wide strategy on 
fisheries and aquaculture, in view of aligning the legislation with the acquis, and harmonise the methodology for 
data collection for fish and fishery products across the country and establish relevant statistics. 

Some progress is being made in approaching the acquis and in the harmonisation with the EU monitoring and 
control  systems,  such  as  in  the  phytosanitary  and  veterinary  sector,  thanks  to  a  combination  of  efforts  of 
domestic institutions and technical and financial assistance from the EU. However, among those with a good 
knowledge of the situation in BiH, fulfilling the above 15 recommendations seems like an impossible mission. 
Therefore, the following concluding statement from the European Commission report (2019) will remain relevant 
to  the  EU  accession  situation  for  the  foreseeable  future,  especially  since  most  of  the  recommendations  had 
already been made in earlier EU reports in this area: 

Bosnia and Herzegovina is at an early stage of preparation in the area of agriculture and rural development and 
fishery and in some level of preparation in the area of food safety, veterinary and phytosanitary policy. 

This is confirmed by the EU opinion on BiH’s application for EU membership (European Commission, 2019), which 
states that:  

61 

 
Bosnia and Herzegovina does not have any policy areas where the country has a good level of preparation or is 
well advanced regarding its capacity to undertake the obligations stemming from EU membership. 

The BiH’s position in relation to the EU means that, for years, BiH will finance the development of agriculture and 
rural  areas  mainly  from  its  own  modest  sources,  which  will  certainly  slow  down  the  restructuring  and 
modernisation of the sector, but BiH will have some freedom to create and lead its own agricultural and rural 
development policy. Nevertheless, it is important not to make major deviations from the current and future EU 
CAP. 

3.7.  Discussion, conclusions and recommendations 

Unlike    earlier,  in  period  2017–2019  the  state  and  both  of  its  entities  had  strategic  documents  for  the 
development of agricultural and rural areas, combined into one (RoS) or as two separate documents (FBiH),. For 
the first time, there are strategic documents at the level of BiH as a state. Analytical activities for the preparation 
of new strategic documents have already started and it is realistic to expect that time gaps without valid strategic 
documents  will  not  appear.  Analyses  of  the  implementation  of  current  strategic  documents  are  not  done 
regularly, as part of public policy; instead they are done superficially and not systematically. It is recommended 
that  analytical  capacities  be  improved  at  all  administrative  levels  and  that  publicly  available  monitoring  and 
evaluation reports be prepared and published on a regular basis. 

BiH  has  no  official  division  of  territories  into  urban  and  rural  areas.  It  is  recommended  that  a  legal  basis  be 
adopted  and  that  the  demarcation  of  the  total  territory  of  BiH  into  urban  and  rural  parts  be  carried  out,  in 
accordance with the methodology applied by the EU (Eurostat) or the OECD. Thus, the available data in the future 
could be classified according to the urban–rural divide, which will enable better targeting and greater sensitivity 
of rural policy measures, including in potential IPARD funds. 

Total budget support for the agricultural sector and rural areas in BiH and its administrative units, although with 
a slight growth trend, is still low (EUR 87 million in 2019). The expected growth, as defined by the strategy, did 
not occur. Budget support in both of the BiH entities is mainly concentrated on first pillar policy measures and 
direct support for producers, whereas support for structural and rural development measures lags significantly 
behind. An approach being taken by decision-makers in both of the BiH entities is to focus on general agricultural 
measures and provide modest allocations for research and development, advisory services and food security. 

Direct payments for producers are still divided into those based on output and those based on hectares or heads. 
Payments based on kilograms/litres make up a larger proportion, which still puts BiH’s agricultural policy at a 
significant distance from the CAP. In the FBiH, the payments are given only to producers of milk and planting 
material, whereas in the RoS the number of producers given such support is much higher and includes those for 
fruits and vegetables, in addition to milk. Nevertheless, milk is still the agricultural product most supported by 
the budget in both the FBiH and the RoS. 

In  the  next  policy  cycle,  from  2021,  BiH  must  clearly  define  the  mechanisms  and  instruments  for  the 
implementation of defined strategic objectives and related budget allocations. In that period, more political and 
other commitments are needed to implement the reform processes accepted in the valid strategic documents, 
wherein one of the key objectives should be to move closer to the CAP. 

Rural development and support for rural areas is very low. In the FBiH, it was completely absent at the Federal 
Ministry  of  Agriculture,  Water  Management  and  Forestry  level  until  2018  and,  in  2018  and  2019,  its  budget 
allocation was quite modest at EUR 0.75 million. There are also insufficient funds in the RoS. Decision-makers in 
both of the BiH entities must recognise the importance of rural development measures (which are the only real 
development measures in agricultural policy) as soon as possible and start implementing the goals set out in the 
current  strategic  documents,  according  to  which  the  FBiH  budget  ratios  for  direct  payments  and  rural 
development should be 55:45 and in the RoS should be 60:40. 

The lack of political will does not allow BiH to withdraw IPARD funds. Instead, BiH uses the EU4Agri programme 
to implement rural development measures such as those from the IPARD (investments in agricultural and food 
industry, etc.). BiH must find a way to be part of the new IPA III programme, in which there will be a significant 
possibility of BiH farmers and the rural population receiving financial support. 

Productivity in the production of many basic agricultural products, measured by yield per unit area, in BiH is 
lower than in most countries/territories in the region. The level of yields is greatly influenced by climatic factors, 
so  that  natural  disasters  such  as  drought,  hail,  floods  or  excessive  rainfall  reduce  the  yield  and  volume  of 

62 

 
production,  which  then  affects  the  GDP  of  agriculture.  Owing  to  climate  change,  such  adverse  events  are 
becoming more frequent. Since most farms are engaged in production in a semi-intensive way, their ability to 
prevent  adverse  events  is  small.  BiH  must  force  climate  change-resilient  technology  and  expand  agricultural 
insurance coverage. 

BiH is a  potential candidate for EU accession. BiH responded to the basic and additional questions  in the EU 
questionnaire. The analytical report of the European Commission for BiH for 2019 lists 15 tasks that BiH should 
fulfil under Chapters 11–13. Some activities are being undertaken in this regard, but progress is slow and it is 
likely to take years to achieve the desired outcome. It is recommended that, in all areas of agricultural and rural 
policy,  if  there  is  real  interest  in  joining  the  EU,  BiH  should  take  actions  that  ensure  a  greater  degree  of 
compatibility with the CAP and other EU policies and avoid those that are contradictory to these policies. 

References 

ASBiH (2018), Labour Force Survey 2018, Thematic Bulletin 10, ASBiH, Sarajevo. 

Bajramović,  S.,  Bogdanov,  N.,  Butković,  J.,  Dimitrievski,  D.,  Erjavec,  E.,  Gjeci,  G.,  Gjokaj,  E.,  Hoxha,  B., 
Stomenkovska, I. J., Konjević, D., Kotevska, A., Martinović, A., Miftari, I., Nacka, M., Ognjenović, D., Rednak, M., 
Tuna, E., Volk, T. and Zhllima, E. (authors); Volk, T., Erjavec, E., Ciaian, P. and Gomez y Paloma, S. (2016), Analysis 
of the Agricultural and Rural Development Policies of the Western Balkan Countries, EUR 27898 EN, Publications 
Office of the European Union, Luxembourg . 

Council of Ministers of BiH (2018), Strategic Plan of Rural Development of Bosnia and Herzegovina (2018–2021), 
Framework document, Sarajevo. 

Council of Ministers of BiH and Directorate for Economic Planning (2019), Bosnia and Herzegovina Development 
Report, Annual report 2018, Sarajevo. 

European Commission (2019), Commission Opinion on Bosnia and Herzegovina’s application for membership of 
the European Union, COM(2019) 261 final, European Commission, Brussels. 

European  Commission  (2020),  Analytical  report  accompanying  the  document  ‘Communication  from  the 
Commission  to  the  European  Parliament  and  the  Council  Commission  Opinion  on  Bosnia  and  Herzegovina’s 
application for membership of the European Union’, SWD(2019) 222 final, European Commission, Brussels. 

FAO (2018), Strategy of Development of Agriculture and Rural Areas of Brčko District BiH for Period 2019–2025, 
Department for Agriculture of Brčko District BiH, Brčko. 

Federal Ministry of Agriculture, Water Management and Forestry (2014), Mid-term Strategy of Development of 
Agricultural sector in Federation of Bosnia and Herzegovina for period 2015–2019, Sarajevo. 

Federal  Ministry  of  Agriculture,  Water  Management  and  Forestry  (2018),  Program  of  Rural  Development  of 
Federation of Bosnia and Herzegovina 2018–2021, Sarajevo. 

Federal Institute for Statistics (2019), Statistical Yearbook 2019, Sarajevo. 

Goss, S. (2012), Rural Households Survey, UNDP. 

Ministry  of  Agriculture,  Forestry  and  Water  Management  of  the  Republic  of  Srpska  (2015),  Strategy  of 
Development of Agriculture and Rural Areas of the Republic of Srpska for Period 2016–2020, Banja Luka. 

Mirjanić, S., Vaško, Ž., Ostojić, A., Rokvić, G., Mrdalj, V., Drinić, Lj. and Vučenović, A. (2010), Rural Development 
of the Republikc of Srpska, Faculty of Agriculture, University of Banja Luka, Banja Luka. 

Muminović,  E.  (2013),  Ranking  and  Qualification  of  Rural  Development  in  the  Federation  of  Bosnia  and 
Herzegovina Based on Available Indicators, master’s thesis, Faculty of Agriculture and Food Sciences, University 
of Sarajevo, Sarajevo. 

Response  on  European  Commission  Questionnaire  for  Chapter 11.  Agriculture  and  Rural  development. 
.gov.ba/dei/direkcija/sektor_strategija/Upitnik/odgovoriupitnik/Archive.aspx?langTag=hr-
HR&template_id=120&pageIndex=2 (accessed 6 June 2020). 

Republic of Srpska Institute of Statistics (2019), Statistical Yearbook of the Republic of Srpska 2019, Banja Luka. 

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UNDP  (2013),  Rural  Development  in  Bosnia  and  Herzegovina:  Myth  or  reality,  National  Human  Development 
Report. 

World 
(https://www.worldbank.org/en/topic/labormarkets/brief/migration-and-remittances). 

‘Migration 

(2019), 

Bank 

and 

remittances’ 

Zubić, G., Vaško, Ž., Ostojić, A., Marković, B. and Brković, D. (2019), Economic Contribution of Forestry to Rural 
Development of the Republic of Srpska, Analysis, Ministry of Agriculture, Forestry and Water Management of the 
Republic of Srpska. 

64 

 
4.  CASE STUDY: KOSOVO* 

Mihone Kerolli Mustafa, Gresa Ferri, Damir Gashi (30) 

4.1. 

Introduction 

EU integration has been among the key priorities for Kosovo* for several years now. The SAA, signed in October 
2015, is an important element in the process towards EU accession. The agreement entered into force in April 
2016, thus marking a significant new phase for Kosovo* and providing new opportunities for closer economic 
relations with the EU countries. 

Invaluable experience was gained through the implementation of the agriculture and rural development plan 
(ARDP) for 2007–2013, and this fed in to the implementation of  Kosovo*’s rural development plan for 2014–
2020. The SAA is aligned with the new strategic direction of the EU rural development policy. The IPA II strategic 
priorities served as a guideline for the objectives set out in the ARDP for 2014–2020, but the ARDP also focused 
on  ensuring  that  the  country/territory’s  strategic  development  objectives  completely  matched  the  needs  of 
Kosovo*’s current agri-food sector, rural areas and forestry sector. 

To date, Kosovo* has made progress in agricultural-related spheres, including in the process of development of 
national agricultural strategies, the registration of farms and statistics, the establishment of control mechanisms 
or work towards grant schemes. Even though the development of the agricultural sector and the harmonisation 
of  national  policies  was  supported  by  the  EU  through  the  IPA  for  2014–2020  and  Technical  Assistance  and 
Information  Exchange  (TAIEX)  assistance,  Kosovo*  still  faces  significant  challenges  in  these  processes.  This  is 
especially  the  case  when  it  comes  to  meeting  the  targets  previously  set  by  the  CAP,  developing  a  standard 
operation  procedure  for  data  collection  and  analysis,  increasing  the  proportion  of  budgetary  support  for  the 
improvement  of  rural  infrastructure,  developing  an  effective  trade  strategy,  providing  advisory  services, 
improving network, communication and monitoring processes, and improving capacity building and knowledge 
transfer. 

Among others, Kosovo* benefits greatly from its agriculture sector in terms of the employment opportunities 
and income generated. The Kosovo* Agency of Statistics (KAS) has shown that, in 2019, the agricultural sector 
contributed 15.3 % of total GVA and 20.85 % of total export value. 

Developing the agricultural sector in Kosovo* is a key factor in improving the trade balance and would contribute 
significantly  to  increasing  the  employment  rate,  increasing  food  security  and  improving  environmental 
protection in general. 

This chapter aims to describe the current situation and the recent development of Kosovo*’s agricultural policy, 
with a special focus on the budgetary support for this policy development, and includes an assessment of the 
agriculture sector. KAS and the Department of Economic Analysis and Agricultural Statistics within the Ministry 
of Agriculture, Forestry and Rural Development (MAFRD) served as the main sources of data for this chapter, and 
a standard APM template enabled a comparison of agricultural budgetary transfers. 

4.2. 

State of the agri-food sector 

This section gives an overview of Kosovo*’s agri‐food sector and describes the outlook for future developments 
in agricultural markets in Kosovo*, focusing on the main agricultural commodities. Kosovo* has huge agricultural 
potential owing to its rich natural resources (soil, climate and water) and key geographical position in the WBs. 
The role of agriculture in Kosovo*’s economy is quite considerable. Compared with the EU average (14.4%) from 
the same year (2017), Kosovo*’s gender pay gap is 9.8 % (EurostatEurostatKosovo* Agency for Gender Equality, 
2020).Eurostat The balance of trade in agricultural products in Kosovo* is extremely negative. 

The  economic  growth  in  2019  was  3.9 %,  with  the  agricultural  sector  making  a  significant  contribution.  The 
proportion of GVA contributed by the agriculture, forestry, hunting and fishery sector varied from 13 % in 2016 
to 15.3 % in 2019 (Table 16). The situation in the agri-food sector in Kosovo* improved in 2016–2019; however, 
the quality standards for food production still require more attention. In particular, enhancing capacity building 
and preparing training curricula for the agri-food sector that are attractive to farmers, including the use of smart 
technology, are needed. 

(30)  T2P Research Centre, International Business College Mitrovica, Mitrovica, Kosovo*; m.kerolli@ibcmitrovica.eu 

65 

 
                                           
In 2019, agricultural enterprises produced about 441.8 tonnes of grain and 68.8 tonnes of potatoes in Kosovo*. 
On the other hand, Kosovo*’s household farms produced about 190.1 tonnes of vegetables and 53.6 tonnes of 
fruit. Local production of livestock is mainly on a very small scale. The data show that Kosovo* remains a strong 
net importer of agri-food products (39.7 % from the EU-27/-28, 33 % from the WBs, 7.5 % from Turkey and 19.8 % 
from other countries). The main products imported are tobacco, beverages, meat, cereals, dairy produce, eggs 
and  honey.  The  agri-food  enterprises  operating  in  Kosovo*  are  relatively  small,  and  raw  materials  and  final 
products, especially for meat processing and the production industry, are to a large extent imported. Currently, 
in Kosovo*, there are around 12 meat processing companies that together process approximately 3 000 tonnes 
of  locally  produced  meat  annually.  On  the  other  hand,  there  are  about  six  relatively  large  meat  processors 
supplying around 15–20 % of Kosovo*’s domestic market (SEEIM, 2019). Local milk production from agriculture 
enterprises in Kosovo* is estimated to produce 240 000 to 260 000 tonnes, of which 10–15 % of is supplied to 
dairies. There was also a rise in the export of agriculture products in Kosovo* in 2019. The majority of exports 
are  to  the  WBs  (51.5 %),  followed  by  exports  to  the  EU-27/-28  (32.1 %),  Turkey  (1.6 %)  and  other  countries 
(16.3 %).  Therefore,  the  trade  balance  is  significant  and  growing  (–694.4 million  in  2019,  an  increase  from  –
633.1 million in 2017). The GVA of the agriculture, forestry, hunting and fishery sector and trade in food and 
agricultural products ranged from EUR 586.1 million in 2017 to EUR 1 103.8 million in 2019). The export/import 
rate was 8.8 % in 2017, while in 2019 it was 8.6 %. Table 16 gives a detailed breakdown of key statistical figures. 

Table 16. Key agricultural statistics of Kosovo* (2010–2019) 

2010 

2011 

2012 

2013 

2014 

2015 

2016 

2017 

2018 

2019 

GVA of the agriculture, forestry, hunting and fishery sector 

(at  current  prices, 

GVA 
million EUR) 

598.8 

614.3 

617.6 

638.7 

661.8 

599.6 

635.0 

586.1 

482.0 

542.2 

Proportion 
activities (% of GVA) 

out 

of 

all 

16.2 

15.6 

14.8 

14.4 

14.3 

12.6 

13.0 

11.4 

8.9 

9.5 

Trade in food and agricultural products 

Exports 
products (million EUR) 

of 

agri-food 

24.7 

26.2 

20.6 

34.9 

39.4 

41.7 

45.3 

61.3 

64.0 

65.0 

Proportion out of exports of 
all products (%) 

8.3 

8.2 

7.5 

11.9 

12.1 

12.8 

14.6 

16.2 

17.40 

20.85 

Imports 
products (million EUR) 

of 

agri-food 

482.8 

561.4 

572.7 

583.7 

616.1 

633.7 

658.8 

694.5 

712.3 

759.4 

Proportion out of imports of 
all products (%) 

22.4 

22.5 

22.8 

23.8 

24.3 

24.1 

23.7 

22.8 

21.28 

21.72 

Trade  balance  in  agri-food 
products (million EUR) 

–
458.1 

–
535.2 

–
552.1 

–
548.8 

–
576.7 

–
592.0 

–
613.5 

–
633.1 

–
648.4 

–694.4 

Export/import rate (%) 

5.1 

4.7 

3.6 

6.0 

6.4 

6.6 

6.9 

8.8 

9.0 

8.6 

Source: XK StatDatabase (2020). 

According to the data, the total utilised area of agricultural land was 416 ha, most of which was meadows and 
pastures (including common land; 218 ha (51.9 %)), while arable land was 188.4 ha (44.8 %), which includes open 
field vegetables and greenhouse vegetables. Arable land use in 2019 was quite similar to that of 2018, with a 
slight decrease from 188.2 ha in 2017. Based on the agriculture holding survey for 2018, farms are classified into 
four  main  categories:  (i)  very  small  farms  of  less  than  1 ha  constitute  9.9 %  of  farms  and  make  up  a  total  of 
18 519 ha; (ii) farms with a size ranging from 1 ha to less than 5 ha make up 50.9 % of farms and represent about 
95 138 ha; (iii) farms with a size ranging from 5 ha to less than 20 ha represent 29.7 % of farms and a total area 
of 55 432 ha; and (iv) farms of 20 ha or more constitute 9.5 % of farms and cover 17 918 ha. 

The  Kosovo*’s  economic  accounts  for  agriculture  include  the  data  up  to  the  end  of  2018,  including  data  on 
production structure and primary income, output, intermediate consumption, gross and net value added and 
other taxes and subsidies. During the reporting period, the data for 2019 were not published. Total agricultural 
outputs decreased from EUR 736.7 million in 2016 to EUR 691.4 million in 2018, whereas, in parallel, agricultural 
increased, with a total intermediate consumption of EUR 303.0 million in 2018 compared with EUR 256.9 million 
in 2016. Agricultural income also fluctuated within the period analysed, with a decrease in the total output of 
basic prices and in GVA and net value in the last year. 

66 

 
 
4.3. 

Socioeconomic issues underlying rural areas 

The most frequently used approach to define rural areas is the OECD’s methodology, according to which an area 
is considered rural if its population density is less than 150 inhabitants/km2, while a community is considered 
urban if its population density is above 150 inhabitants/km2. This method is not particularly relevant to Kosovo* 
because the population density is 166 persons/km2. 

The definition of rural areas used by KAS for the Kosovo* population and housing census for 2011 was based on 
settlement level, with rural areas characterised by a low population density and having much of the land devoted 
to agriculture in comparison with surrounding areas (KAS, 2011). 

Table 17. Labour force structure 

Factor 

Population aged 15 years and over 

Population economically active 

Economically active population aged 15 years and over (%) 

Women among the economically active population (%) 

Number of people employed 

Employed population aged 15 years and over (%) 

Women among employed population aged 15 years and over (%) 

People employed in agriculture (%) 

Women employed in agriculture (%) 

People employed in the industrial sector (%) 

Women employed in the industrial sector (%) 

People employed in other activities (%) 

Women employed in other activities (%) 

Number of people unemployed 

People unemployed in the economically active population (%) 

Women among the unemployed population (%) 

Source: KAS, Kosovo* population and housing census for 2011. 

Figure 

1 252 248 

508 100 

40.6 

29.1 

280 454 

22.45 

5.2 

4.4 

0.2 

15.3 

1.8 

42.7 

21.4 

227 646 

44.8 

36.0 

In the Kosovo* census of 2011, a settlement was defined as rural by an individual administrative decision of the 
municipality.  Using  this  delimitation  by  KAS,  1 028 963 ha  (94.3 %)  were  determined  to  be  rural  areas,  with 
62.0 % of the population living there. For the ARDP for 2014–2020, the population of the settlements was used 
to define rural areas to reflect the existing situation in  Kosovo* from a socioeconomic perspective and at the 
same time to use an approach that was in line with the current administrative situation. 

Kosovo* falls into the category of lower-middle-income countries/territories and has experienced solid economic 
growth performance in recent years. However, the economic situation is challenging. Unemployment is still very 
high and the reliance on remittances and direct or indirect support from donors has declined but still remains 
significant for Kosovo*. 

Economic  growth  has  been  mainly  driven  by  domestic  demand,  with  strong  increases  in  government 
consumption and investments. Exports of goods and services have also increased, but still cover only about one 
third of total imports. According to the 2012 census, the economically active population (aged 15 years and over) 
is less than 50 % of the total population, while the unemployment rate is as high as 44.8 % (Table 17). 

According to the labour force survey conducted in 2012, an average of 35.1 % of adults aged between 15 and 64 
years were unemployed; in urban areas, the unemployment rate was 28.5 % while, in rural areas, it rose to 40.1 % 
(Table 17). When broken down by gender, this rate is significantly higher for women (44.4 %) than for men (32 %). 
The highest unemployment rate is reported among young people (aged 15 to 24 years), namely 60.2 %. According 
to  expert  estimates,  about  80 %  of  all  unemployed  people  have  been  without  a  job  for  more  than  a  year, 
revealing deep structural challenges (KAS, 2012). The main challenge in terms of Kosovo*’s economy is not only 

67 

 
low levels of employment but also very low productivity. The statistics show that about 60 % of job seekers are 
considered  unskilled  and  the  overall  skills  level  is  very  low.  Thus,  public  service  salaries  remain  the  most 
important source of income in Kosovo* and are the main source for almost a quarter of all households (Table 18). 
The second most important source is wages from the private sector and business, followed by money sent from 
abroad (remittances). 

Table 18. Main sources of household income in Kosovo* (%) 

Source of income 

Salaries and wages from the public sector 

Salaries and wages from the private sector 

Other household businesses 

Money sent from abroad (remittances) 

Income from temporary activities 

Pensions 

Agriculture 

Social benefits – first category 

Other 

Social benefits – second category 

2011 

25 

22 

12 

9 

9 

8 

7 

4 

2 

2 

2017 

23 

23 

15 

10 

9 

8 

5 

4 

2 

1 

Total 

100 

100 

Source: KAS, results of household budget survey for 2017. 

4.4.  National policy framework 

The MAFRD bases its work on the following main policy documents: the national development strategy for 2016–
2021, the ARDP for 2014–2020, the medium term expenditure framework for 2020–2021 (Ministry of Finance, 
2018) and the economic reform programme (ERP) for 2019–2021 (Ministry of Finance, 2019). The MAFRD also 
follows  other  strategies,  such  as  strategy  for  climate  change  for  2019–2028,  the  strategy  for  local  economic 
development  for  2019–2023,  the  strategy  and  action  plan  for  biodiversity  conservation  for  2011–2020,  the 
Kosovo* IT strategy, etc. 

The national development strategy for 2016–2021 sets out concrete actions for the implementation of each pillar 
related to strategic planning, financial aid prioritisation, capacity building, progress monitoring, and creating a 
fund  for  development  and  employment.  The  strategy  discusses  potential  future  opportunities  for  more 
sustainable energy production, reducing energy consumption through efficiency measures, sustainable waste 
management,  agriculture,  etc.  The  main  objectives  of  this  strategy  are  to  enhance  farm  viability  and 
competitiveness; to restore, preserve and enhance ecosystems; and to promote social and economic inclusion 
and the transfer of knowledge and innovation. 

The ARDP for 2014–2020 was based on the national development strategy and its priorities. The ARDP addressed 
three  key  EU  rural  development  policy  axes,  namely  agricultural  sector  competitiveness,  sustainable 
management of natural resources and climate actions, and balanced territorial development of rural areas. It 
also addressed the competitiveness of the agri-food sector in alignment with EU veterinary, phytosanitary, food 
safety and environmental standards and the restructuring and modernisation of the sector and how this would 
contribute to the development  of sustainable land management  practices by supporting organic farming and 
other agri-environmental practices, sustainable forest management and forestation. This long-term programme 
continues to contribute to sustainable rural development by supporting the diversification of economic activities 
and strengthening the approach to capacity building and knowledge transfer. 

The  new  ARDP  is  planned  for  2021–2027.  The  programme  will  focus  on  investments  in  physical  assets  of 
agricultural holdings, processing and marketing of agricultural products (by supporting 650 projects), supporting 
environment and climate change and producers’ organisations, and enhancing investments, capacity building 
and knowledge transfer among rural inhabitants. The new ARDP will continue to provide support for improving 
the environmental performance of the agri-food sector, as this is one of the strategic objectives of the IPA, as 
well  as  improving  measures  for  sustainable  land  and  forest  management  and  the  development  of  organic 

68 

 
farming.  By  placing  more  emphasis  on  agri-environmental  measures,  the  new  programme  should  help  build 
farmers’  capacity  and  develop  the  sector  even  further  in  terms  of  (i)  drafting  and  implementing  local 
development strategies to promote rural development through local initiatives and partnerships; (ii) increasing 
the skills of farmers relating to the management of economically viable farms, including farm accountancy skills, 
financial planning and market orientation; and (iii) knowledge transfer on the application of modern agricultural 
production, forest management and aquaculture, new technology and practices compatible with the relevant EU 
standards (environmental standards, including proper resource management, hygiene and quality standards, and 
animal welfare standards, as applicable). 

Another  important  strategy  that  reflects  the  efficiency  of  the  development  of  the  agriculture  sector  is  the 
strategy  for  climate  change  for  2019–2028.  This  publication  of  this  strategy  was  the  initial  step  in  the  policy 
management process for the mitigation of greenhouse gases and adaptation to climate change for the next 10 
years.  The  strategy  includes  mitigation  and  adaptation  measures  to  stimulate  sustainable  development,  and 
focuses on an interdisciplinary integrated approach that aims to find a balance between economic developments, 
environmental protection and land use. 

The strategy for local economic development for 2019–2023 sets out how the vision for municipalities should be 
implemented,  namely  through  efficient  governance,  quality  education,  a  clean  environment,  efficient 
agriculture,  and  improved  health  and  social  welfare.  Thus,  half  of  the  total  budget  under  Kosovo*’s  ERP  is 
designated by the government for subsidies and grants to ensure that the reform measures are applicable to the 
development of the agriculture sector (Ministry of Finance, 2019). Similarly, government support continued in 
2019, mainly for investment projects (measures under the second pillar). Through the planned reforms in the 
ERP for 2019–2021, huge progress was made regarding the improvement of agricultural infrastructure for agri-
businesses  by  showing  a  commitment  to  supporting  farmers  with  the  increase  of  irrigation  system  coverage 
(40 % of arable land), increasing the number of laboratory units, enhancing the agricultural wholesale market 
and launching the integrated agricultural information system. During the period analysed, EUR 2.1 million was 
been designated by the MAFRD for irrigation projects for the public sector, and EUR 1 million was allocated from 
the 2018 rural development programme to private farms. The effective application of these measures is quite 
challenging,  as  it  requires  more  financial  resources  than  have  been  distributed  from  the  national  budget  for 
supporting the programme and other activities, for example those related to the consolidation of agricultural 
land. The action plan of the strategy on land consolidation for 2010–2020 notes that the implementation of this 
measure  took  place  during  2016–2018  and  that  more  than  EUR 0.5 million  per  year  was  allocated  from  the 
national budget (MAFRD, 2019). Land consolidation is an integral part of rural development policy would benefit 
farmers in many ways, including through land tenure, investment in their property and easier access to credit. 

In addition to these other strategies, the Government of Kosovo* has recognised the strategic importance of the 
IT industry for economic development and structural transformation towards a knowledge-based economy and 
the development of agriculture. A significant economic benefit of the IT industry is its positive impact on the 
efficiency  and  productivity  of  the  agriculture  sector,  namely  through  increasing  market  competitiveness  and 
product promotion. Thus, agriculture, as a traditional sector of Kosovo*’s economy, like tourism, could improve 
its international competitiveness by using modern software applications and IT services. 

Furthermore, financial sustainability, the utilisation of resources for sustainable economic development, waste 
management and the strength of the local economy (including the green economy) are some of the key criteria 
to ensure that there is sustainable development at the local level (municipalities). The strategy and action plan 
for biodiversity conservation for 2011–2020 recognises that the inventory of plant and animal species is old and 
not fully representative and thus is insufficient as a basis for a proper conservation process. However, it is also 
recognised that Kosovo*’s conservation efforts cannot wait for a full inventory to be produced, as this could lead 
to further loss of biodiversity. Kosovo* is not yet a signatory party of any convention or international agreement 
in  the  field  of  nature  protection.  The  current  network  of  protected  areas  is  based  on  national  biodiversity 
conservation legislation, which is undergoing a process of harmonisation with the relevant EU acquis; therefore, 
one protected area is still reported under various different categories. 

Kosovo* has gone a step further and included the concept of a green economy (i.e. economic growth in line with 
sustainability, both environmental and social) into several national strategic documents and programmes, such 
as the national development strategy for 2016–2021, the ARDP for 2014–2020, the strategy for climate change 
for 2019–2028, the strategy for local economic development for 2019–2023 and the energy strategy of Kosovo* 
for  2019–2026.  These  strategies  focus  on  proactive  involvement  of  relevant  stakeholders  in  sustainable 

69 

 
agriculture and rural development, energy-efficient solutions, sustainable use and management of renewable 
resources, climate actions and the implementation of environmental standards. 

4.5.  Measures and budgetary support for agriculture and rural development 

The Government of Kosovo* and the MAFRD continued to support the development of the agricultural sector 
and  rural  areas  in  Kosovo*  throughout  2014–2020,  utilising  instruments  established  for  the  reformation 
purposes in line with EU integration, aiming to gradually approximate Kosovo*’s agricultural polic y with the EU 
CAP. 

The  total  budgetary  support  amounted  to  EUR 68.82 million  in  2019,  an  increase  on  the  previous  year 
(EUR 67.54 million in 2018). An increase was also visible from 2011 to 2019 for all the subgroups of support, such 
as  market  and  direct  producer  support  measures,  structural  and  rural  development  measures  and  other 
measures related to agriculture (Figure 33). 

Figure 33. Total budgetary support for agriculture (2011–2019) 

Source: XK APMC database (2020). 

The  MAFRD  focused  on  providing  direct  production  support  as  a  subsidy  programme,  helping  to  advance 
agricultural sector competitiveness, increasing exports and agricultural production, and improving the income of 
the  farmers.  Kosovo*  continued  with  new  direct  payments  schemes  by  emphasising  subsidies  for  organic 
farming, aquaculture and livestock purchases. 

Despite constituting a low proportion in certain years, market and direct producer support maintained a positive 
in  2018  and 
upwards  trend,  with  EUR 28.2 mill 
EUR 31.3 million in 2019 (Figure 33). Input subsidies were omitted for several years, but were reinitiated from 
2016 and were granted  for fuel for harvesting,  with the amount  remaining the  same for 2016–2019, namely 
EUR 0.4 million per year. 

in  2017,  EUR 29.6 million 

in  2016,  EUR 27.1 million 

The  proportion  of  support  measures  made  up  by  market  and  direct  producer  support  in  Kosovo*  (first  pillar 
measures)  for  2016–2019  remained  around  the  same  level  during  that  period,  50 %,  with  no  significant 
fluctuations  during  that  period  (Figure 34).  This  proportion  remains 
low  compared  with  other  WB 
countries/territories. During 2016–2019, the MAFRD continued to provide direct payments for farmers, with no 
significant changes in terms of the sectors subsidised. Nevertheless, there have been changes in terms of the 
amount subsidised per hectare, as the subsidies gradually increased for the following crops: rye, grape, barley 
and organic agriculture. At the same time, there have been changes in the livestock sector with subsidies for 
quail and reported cattle slaughter.  

70 

 
 
Figure 34. Market and direct support measures 

Source: XK APMC database (2020). 

Approximately 50 % of the total budget for 2016–2019 was dedicated to the second pillar. During this period, 
there  was a noticeable decrease in  measures aiming to  support  the rural economy and population (with the 
amount allocated decreasing from EUR 1.7 million in 2016 to EUR 0.31 million per year in 2017–2019). Such funds 
were  allocated  through  support  for  farm  diversification,  basic  infrastructure  for  village  development  and 
measures for local capacity building (LEADER), primarily aiming to support activities in rural areas. Support for 
structural  and  rural  development  measures  increased  significantly  in  2018,  in  comparison  with  the  previous 
years.  It  amounted  to  EUR 36.95 million,  an  increase  of  around  28 %  when  compared  with  2016  and  2017 
(Figure 35). 

The most significant proportion of the budget for improving the competitiveness of the agricultural sector was 
allocated to measures aimed at on-farm restructuring and agri-food restructuring support, with a significantly 
increased proportion of the budget in 2018 and 2019 (EUR 32.60 million per year) compared with 2016 and 2017 
(EUR 13.48  and  14.60million,  respectively).  On-farm  restructuring  support  was  mostly  made  up  of  measures 
aimed  at  providing  investments  in  agricultural  subsectors  such  as  honey,  milk,  vegetables,  meat  and  cereals. 
During the period analysed, the support allocated to on-farm investments increased, from EUR 10.9 million in 
2016  to  EUR 25.1 million  in  2019,  indicating  that  a  lower  proportion  of  the  budget  was  being  allocated  to 
improvements  in  competitiveness,  sustainability,  the  quality  of  agricultural  products,  the  introduction  of 
international standards and farm productivity. 

Figure 35. Structural and rural development measures (2011–2019) 

Source: XK APMC database (2020). 

Kosovo* recognised the importance of having a social dimension to support for the rural economy and increased 
the proportion of its budget for the rural economy and population by 152 %, increasing from EUR 1.7 million in 
2016 to EUR 4.3 million in 2019. This shows Kosovo*’s commitment to supporting economic and social growth 

71 

 
 
 
in rural areas through employment opportunities, the growth of income, increased demand and productivity. In 
addition,  Kosovo*  increased  its  budgetary  support  for  measures  targeting  the  environment  and  countryside, 
aiming to financially support all those farmers with a good farming approach and committed to protecting and 
preserving  the  environment  of  their  farmland  (this  support  increased  from  EUR 0.1 million  in  2016  to 
EUR 0.3 million  per  year  in  2017–2019).  This  type  of  support  shows  Kosovo*’s  dedication  to  aligning  its 
environmental policy with the EU CAP, reducing environmental risks, preserving water and soil quality, enhancing 
biodiversity and increasing knowledge among farmers on the importance of agri-environmental schemes. 

Figure 36. Other measures related to agriculture (2011–2019) 

Source: XK APMC database (2020). 

The measures set out by the national development strategy for 2016–2021 and the ARDP for 2014–2020 will 
benefit farmers and small and medium-sized enterprises, small business activities in rural tourism and leisure 
facilities, industry, organisations, academia and citizens. 

Limited funds are allocated to other measures in agriculture, with EUR 1.55 million allocated in 2019. The highest 
amount  of funds allocated was in 2017 with EUR 7.3 million. The implementation of food safety standards in 
Kosovo* remains a challenge because many of the companies operating in the country require technical support. 
The  funds  dedicated  to  food  safety  are  still  low,  with  EUR 1.43 million  allocated  in  2019  (a  decrease  from 
EUR 7.17 million in 2017. The budget for research and development and expert service measures has remained 
at around the same level over the years with EUR 0.13 million allocated to these measures in 2017, 2018 and 
2019 (Figure 36). 

4.6. 

EU approximation process 

As mentioned in the above sections, Kosovo*’s agricultural policy is mainly oriented towards EU integration. The 
agriculture sector is considered to be among the most challenging sectors in Kosovo*’s policy development for 
alignment with the EU acquis and compliance with the EU CAP. Therefore, greater efforts are required to obtain 
additional  support  from  donors  to  take  appropriate  steps  to  improve  the  competitiveness  of  the  agricultural 
sector. 

The ARDPs for 2007–2013 and 2014–2020 further describe the budgetary support provided for agriculture and 
rural  development  in  Kosovo*,  for  which  the  EU’s  CAP  framework  has  been  followed.  However,  very  limited 
funds were allocated for the implementation of the ARDP and therefore the objectives were focused mainly on 
agricultural production and the competitiveness of this sector. The agricultural policy was concentrated on direct 
support measures that closely resembled the first pillar measures of the CAP and support measures for rural 
development that resembled second pillar measures of the CAP. Even though public investments are quite high, 
there is currently still a need to ensure proper implementation of support schemes that are aimed at agricultural 
and  rural  development  as  part  of  the  ARDP  for  2014–2020  and  to  ensure  that  they  fulfil  the  objectives  of 
harnessing the sector’s productivity and direct existing policies for the diversification of activities and the transfer 
of innovation and knowledge within agriculture and organic farming. 

Even though, Kosovo* developed and harmonised its policy documents in line with the EU, the implementation 
of this legislation is very poor, which puts pressure on the application of several measures for nature protection, 

72 

 
 
including the use of natural resources and effective management. The harmonisation of laws between sectors is 
absent, and more effort is required to stimulate cooperation with other departments, ministries, universities, 
university colleges and non-governmental organisations. 

According  to  the  EU  report  on  Kosovo*’s  progress,  the  country/territory  has  undertaken  some  level  of 
preparation for agriculture and rural development. However, limited progress has been made on improving the 
implementation of the ARDP. Improving the evaluation and monitoring of grants and direct payments under the 
programme is an important priority that should be emphasised in the long run, and investments in the sector 
should be made more efficient, mostly to stop the loss of agricultural land and to implement legislation on spatial 
planning. Kosovo* also has some level of preparation in the area of food safety, veterinary and phytosanitary 
policy.  Some  progress  was  made  in  adopting  legislation  in  the  areas  of  food  safety  and  veterinary  practices 
(European Commission, 2020). 

Kosovo*’s policies have been shown to be beneficial in terms of their  harmonisation with most of the IPARD 
measures,  such  as  achieving  land  consolidation,  supporting  organic  farming,  increasing  farmers’  productivity, 
increasing technical assistance and protecting  forestry. However, technical  support  and capacity building still 
require  additional  efforts.  Unlike  certain  other  WB  countries  (Albania,  Montenegro,  North  Macedonia  and 
Serbia), Kosovo* still remains outside the financial scheme of the IPARD. All funds are allocated from the national 
budget and at present there is some difficulty in adequately allocating budgetary support for the improvement 
of rural infrastructure and the maintenance of rural heritage, for general advisory services for agriculture (mainly 
used to support food safety services) and for the development of effective agricultural trade strategy based on 
market analysis, to support local producers. Therefore, building cooperation with advisory services and other 
agriculture  associations  in  the  region  and  Europe  remains  important  to  the  knowledge  transfer  process  and 
capacity building. 

4.7.  Discussion, conclusions and recommendations 

Agriculture has major economic potential in Kosovo*. In that context, Kosovo* has experienced progress in terms 
of  assessing  past  competitiveness  and  the  potential  for  economic  growth  in  the  future.  The  government  has 
recognised the importance of investing in agri-rural development. The results of this assessment emphasised the 
increased interest in rural activities as demonstrated through farm diversification and non-agricultural activities, 
and an increased awareness of climate change challenges and the use of renewable energy in the agriculture 
sector. Progress has also been made in terms of the increased demand for organic food and an increase in the 
number of organic farmers. 

Overall, during the period analysed, there was a positive public perception of the approximation of the national 
agricultural policy with the EU CAP owing to increased financial support, which is helping to stabilise the grave 
financial situation of farmers. However, the MAFRD needs to take the following steps in terms of policy design 
and impacts: the MAFRD needs to advocate more within the government for the necessary adjustments to the 
budget for the implementation of all of the measures and policies set out and for an increase in the subsidies 
available in order to bring about to the expected results. The purpose of the subsidies is to provide stability in 
agriculture  in  the  long  run  and,  with  increased  subsidies,  farmers  would  expect  better  results  in  terms  of 
productivity. 

In addition, the Agency for Agricultural Development should be in charge of the allocation of financial support 
and the monitoring of grants, their implementation and their outcomes, instead of the MAFRD. 

Capacity  building  continues  to  present  obstacles.  Training  curricula  for  each  agricultural  sector  need  to  be 
prepared  in  order  to  attract  farmers,  including  the  use  of  smart  technology  and  the  improvement  of 
communication via electronic media so that farmers understand the role of advisory services. This service can be 
delivered through service providers based on ‘teaching and learning’ practices. A further challenge for Kosovo*’s 
agriculture  sector  is  the  improvement  and  strengthening  of  knowledge  transfer  in  order  to  develop  and 
implement  local  development  strategies,  promote  cooperation  between  local  groups  and  facilitate  good 
governance practice. 

Based on the essential features of agriculture policy, the following key recommendations need to be prioritised 
in  the  next  strategy  and  ARDP:  (i)  designing  a  comprehensive  set  of  schemes  addressing  the  key  agri-
environmental  problems  and  increasing  skills  and  competence  for  production  practices  compatible  with  new 
farm  technology  standards;  (ii)  furthering  the  harmonisation  of  Kosovo*’s  long-  and  mid-term  strategic 
documents with the EU CAP as a result of updates and changes; and (iii) increasing the proportion of budgetary 

73 

 
support for the improvement of rural infrastructure, the maintenance of rural heritage and general services for 
agriculture (mainly used to support food safety services). This support will strengthen the development of an 
effective agricultural trade strategy based on market analysis to support local producers. At the same time, the 
development of standard operating procedures for data collection and analysis, to appropriately manage all data 
obtained at the central level, is necessary in order to improve the data management system in the agriculture 
sector. 

References 

European  Commission  (2019),  Kosovo*  2019  Progress  Report,  SWD(2019) 216  final,  European  Commission, 
Brussels. 

Kosovo*  Agency  of  Statistics  (2012).  Kosovo*  in  Figures  2011,  ttps://ask.rks-gov.net/media/2900/Kosovo-in-
figures-2011.pdf  

Kosovo* Agency of Statistics (2013). Kosovo* in Figures 2012.  https://ask.rks-gov.net/media/2899/Kosovo-in-
figures-2012.pdf 

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MAFRD (2017), Agriculture and Rural Development Program 2017 , MAFRD, Pristina, Kosovo*. 

MAFRD (2019), Green Report 2019, MAFRD, Pristina, Kosovo*. 

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Ministry of Finance (2018), Medium Term Expenditures Framework 2019–2021, Ministry of Finance. 

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Ministry  of  Local  Government  Administration  (2018),  Strategy  for  Local  Economic  Development  2019–2023, 
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Volk, T., Rednak, M., Erjavec, E., Rac, I., Zhllima, E., Gjeci, G., Bajramović, S., Vaško, Ž., Kerolli Mustafa, M., Gjokaj, 
E., Hoxha, B., Dimitrievski, D., Kotevska, A., Janeska Stamenkovska, I., Konjevic, D., Spahic, M., Bogdanov, N. and 
Stevović,  M.  (authors),  Ilic,  B.,  Pavloska-Gjorgjieska,  D.  and  Ciaian,  P.  (eds)  (2019),  Agricultural  Policy 
Developments  and  EU  Approximation  Processes  in  the  Western  Balkan  Countries,  Publications  Office  of  the 
European Union, Luxembourg. 

74 

 
 
 
5.  CASE STUDY: MONTENEGRO 

Mirsad Spahić (31) 

5.1. 

Introduction 

The  main  objective  of  Montenegro’s  agricultural  policy  is  to  improve  the  competitiveness  of  agricultural 
production and improve living conditions in rural areas. The main barriers to strengthening the competitiveness 
of the food production sector in Montenegro are low productivity per unit area, unfavourable age structures in 
rural areas, underdeveloped rural infrastructure and a lack of adequate forms of farmers’ associations in most 
agricultural subsectors. In 2017–2019, a lot was done to make agricultural holdings more efficient and structured 
in accordance with the needs of the market. 

To improve the living standards and conditions in rural areas, several new measures have been planned in the 
‘agri-budget’. At the same time, the programme for development of agriculture and rural areas in the IPARD II 
for 2014–2020 (the IPARD II programme) is being implemented to improve rural areas, increase employment and 
slow  the  existing  trend  of  depopulation  in  these  areas,  as  well  as  to  improve  the  situation  in  the  field  of 
infrastructure.  In  cooperation  with  local  self-government  units,  the  issues  of  water  supply,  roads  and  other 
infrastructure are being addressed and there will be continuous work on education and improving knowledge 
among agricultural producers to allow them to make greater use of the available means of support. 

Based on the increasing number of registered agricultural producers and the growing number of requests for 
support, it can be said that interest in agriculture is much higher than in the previous period. Opportunities for 
participation in agriculture have increased significantly, given that more funds are allocated for agriculture and 
the number of people in administration, who are servicing agricultural producers, is increasing. Discussions were 
held with farmers (and examples from the EU were presented) in the previous period to support and prepare 
them for the use of future funds. 

Programmes in the veterinary and phytosanitary sectors, as well as food safety programmes, were implemented. 
Thanks  to  investments  in  food  processing  facilities  and  the  achievement  of  EU  food  safety  standards,  food 
processing  facilities  have  been  upgraded,  and  the  number  of  those  that  comply  with  EU  requirements  has 
significantly  increased  (from  three  facilities  in  2014  to  61  facilities  in  2020).  Currently,  Montenegro  has  14 
approved facilities for exports to the EU. 

There  were  noticeable  changes  in  2017–2019,  both  in  strengthening  administrative  capacities  and  legal 
regulations  and  in  strengthening  the  conditions  for  the  realisation  of  agricultural  activities.  The  MARD  has 
directed  its  activities  to  realise  the  obligations  defined  in  the  programme  of  work  of  the  Government  of 
Montenegro,  as  well  as  in  the  direction  of  fulfilment  of  the  obligations  established  within  the  EU  accession 
programme of Montenegro and within negotiation Chapters 11, 12, 13 and 27. 

5.2. 

State of the agri-food sector 

Agriculture is one of Montenegro’s strategic development sectors. Its contribution to GDP in 2019 was 6.4 %. 
The gross value of production in agriculture, forestry and fisheries in 2019 amounted to EUR 519.5 million and 
increased by 0.8 % compared with 2018. Montenegrin agriculture is  characterised by a large number of small 
and fragmented farms. The average farm size is 5.8 ha and this is the main reason for the non-competitiveness 
of  small  Montenegrin  producers.  As  agriculture  is  an  important  sector  for  the  development  of  rural  areas  of 
Montenegro, livestock breeding – considering the configuration of the terrain – represents its most important 
branch, as 71.4 % of all farms are breeding livestock (Monstat, 2017). Livestock production allows Montenegro 
to  utilise  less  productive  areas  (pastures  and  meadows),  which  are  dominant  in  the  structure  of  the  total 
agricultural  area  in  Montenegro.  Plant  production  is  characterised  by  a  large  number  of  small  agricultural 
holdings with different plant crops (WTO, 2020).  

According  to  the  preliminary  data  of  the  farm  structure  survey  in  2016,  the  number  of  agricultural  holdings 
(43 791)  in  2016  had  decreased  by  10.4 %  compared  with  the  agricultural  census  for  2010,  whereas  98 949 
persons were engaged in agricultural activity in 2016. However, the amount of total utilised agricultural land was 
higher in 2016 than in 2010, namely by 15.6 %, which indicates that certain structural changes had occurred that 
had  increased  the  consolidation  of  agricultural  holdings.  In  2010,  the  average  farm  size  was  4.5 ha  (utilised 

(31)  Department  of  Economic  Analysis  and  Market,  Ministry  of  Agriculture  and  Rural  Development,  Montenegro; 

mirsad.spahic@mpr.gov.me 

75 

 
                                           
agricultural land), whereas the current average farm average size is 5.8 ha, which backs up the conclusion that 
farms are being consolidated. According to data from the 2010 census, the number of agricultural holdings with 
a size ranging from 0 to 4 ha was 42 199, but in 2016 this number was 32 045, representing a reduction of 24.1 %. 
However, at the same time, the number of agricultural holdings increased in the category from 4 to <100 ha, 
namely from 6 671 to 11 746, or by 76.1 % (Monstat, 2017). In the last few years of the period analysed, a number 
of measures were introduced that led to the consolidation of agricultural holdings in order to meet the conditions 
required for support  provided by the state. It is important  to note that, at the end of February 2020, almost 
12 000 farmers had registered in the MARD register of agricultural producers; this represents the number of 
farms that are commercialised and that expect some help from the MARD (MARD, 2020a). 

The  increased  subsidies  and  support  to  investments  have  led  to  numerous  positive  developments  in 
Montenegro’s  agricultural  production.  In  2019,  the  total  area  of  land  used  for  agriculture  was  257 469.6 ha 
(around  19.8 %  of  the  total  Montenegrin  territory);  94.2 %  of  this  was  perennial  meadows  and  pastures  for 
livestock  breeding,  2.8 %  was  arable  land,  2.2 %  was  permanent  crops  and  0.8 %  was  kitchen  gardens.  In 
comparison with 2018, the total utilised agricultural land in 2019 increased by 0.3 % (Monstat, 2020a). 

In the livestock sector, the total number of cattle in 2019 was 81 432 (which had decreased by 2.2 % compared 
with 2018). The most notable decrease in 2019 was in pig and poultry numbers, which decreased by 2.3 % and 
4.6 %, respectively, compared with 2018. The total milk production in Montenegro (cow’s, sheep’s and goat’s 
milk) was 177.9 million litres in 2019, of which the majority was cow’s milk (93 %). The average milk yield per 
cow was 2 880 litres. Total milk production was on a par with the level of previous years. The total quantity of 
wool produced was 191 tonnes (1.7 kg per sheep). The production of eggs for consumption decreased by 13.9 % 
in 2019 compared with 2018. In 2019, the total quantity of cow’s milk purchased was 27.9 million litres, with a 
decrease of 1.2 % compared with the same period in 2018 (Monstat, 2020b). 

Considering the size of farms and the limited natural resources for dealing with agriculture, especially for the 
mass production of food, Montenegro is a net importer of food and is characterised by a high foreign trade deficit 
(Figure 37). If we look at the structure of the agricultural products that are imported most, it is clear that, in the 
majority  of  cases,  there  are  products  that  cannot  be  produced  in  Montenegro  or  whose  production  is 
unprofitable  and  limited,  both  due  to  a  lack  of  input  and limited  resources.  This  applies  to  products  such  as 
cereals, cereal-based products, cocoa products, carbonated soft drinks and others. 

Figure 37. Total exchange of agricultural products (million EUR) 

Source: Monstat (2020). 

Tourism is also one of the factors that influences the growth of imports, which is also reflected in the monthly 
trade  data:  it  is  clearly  seen  that  most  agri-food  imports  occur  during  the  summer  months  (meat,  alcoholic 
beverages, carbonated soft drinks, bakery products and dairy products). The total imports for 3 months of 2019 
(June, July and August) amounted to EUR 180 million and accounted for 35 % of total annual imports. By adding 
the month of December (i.e. the winter tourist season and the new year holiday season), the imports in these 4 
months is close to EUR 230 million, which is 39.7 % of total annual imports (MARD, 2020b). 

76 

 
 
The  data  from  the  FADN  pilot  project  showed  that  farms  are  mostly  operated  positively  because  they  have 
received some type of support from the national budget, either direct payments or investment grants. Therefore, 
without  the  help  of  the  state,  this  type  of  farm  would  almost  certainly  not  exist,  and  there  are  many  in 
Montenegro. By comparing Montenegro data with data for the neighbouring countries and the EU average, it 
can be seen that Montenegro provides the highest payments to the dairy sector, and the market for milk and 
dairy products is still dependent on imports. Another very important fact, which attracted attention after the 
results were collated, is that the cost  of production in animal and plant production is extremely high, mostly 
because all of the raw materials required are imported from the surrounding countries and the EU (FAO, 2017). 

Socioeconomic issues underlying rural areas 

The most frequently used methodology for defining rural areas is the OECD methodology, according to which a 
community is considered rural if its population density is less than 150 inhabitants per km2, while a community 
is considered urban if its population density is above 150 inhabitants per km2. Rural areas are classified further 
at the regional level as follows: 

—  predominantly rural region – more than 50 % of the population lives in rural local communities; 

—  intermediate region – between 15 % and 50 % of a region’s population lives in rural local communities; 

—  predominantly urban region – less than 15 % of a region’s population lives in rural local communities. 

When analysing the three regions of Montenegro according to the OECD methodology, it can be seen that the 
northern region (covering 13 municipalities) is a predominantly rural region (59.7 % of the population lives in 
rural  local  communities),  while  the  coastal  (41.7 %)  and  central  (20.4 %)  regions  are  intermediate  regions. 
Judging by the data presented above and the OECD  methodology, almost the whole territory of Montenegro 
could be considered rural. However, taking into account the pronounced inequalities among territorial units at 
the local level (municipalities) and other specific features of Montenegro, the following approach for defining 
rural areas is proposed for the purpose of this IPARD II programme. In municipalities with urban centres that 
have a  population above  10 000 (i.e.  settlements classified by the Statistical  Office of  Montenegro  (Monstat, 
2020) as urban and that in administrative terms are urban centres), such settlements are excluded from rural 
areas and the remaining areas are classified as rural. On the other hand, in municipalities that, according to the 
2011  census,  have  settlements  of  less  than  10 000,  the  whole  territory  of  such  a  municipality  would  be 
considered a rural area. 

According  to  the  last  census  carried  out  in  2011  by  Monstat,  the  population  of  Montenegro  is  620 029.  The 
population density is 45 people per km2, on average, making Montenegro one of the most sparsely populated 
countries in Europe (except for the Nordic countries). According to the Constitution of Montenegro, the capital 
city, Podgorica, has a population of 185 937 (Government of Montenegro and MARD, 2014). 

Table 19. Population of Montenegro, total and by regions (2003 and 2011) 

Population (2003 census) 

Population (2011 census) 

Region 

Coastal 

Central 

Total 

145 847 

279 419 

Northern 

194 879 

Urban 
(%) 

59.8 

78.9 

39.0 

Rural (%) 

Total 

40.2 

21.1 

61.0 

148 683 

293 509 

177 837 

Urban 
(%) 

58.3 

79.6 

40.3 

Difference  from  2003  to 
2011 

Rural (%) 

In total 

Rural (%) 

41.7 

20.4 

59.7 

2 836 

14 090 

–17 042 

1.5 

–0.7 

–1.3 

–1.3 

Montenegro 
(total) 

620 145 

61.9 

38.1 

620 029 

63.2 

36.8 

–116 

Source: Monstat, 2003 and 2011 censuses. 

The data from the last two censuses show two obvious trends. The is related to the mass migration from the 
northern part of Montenegro to the central and coastal regions of the country and the second regards migration 
from rural to urban areas. Montenegro has a very old population and over the last 50 years the natural population 
increase has fallen by 60 %. The number of newborns over the last half of the century fell by 25 %, while the 
average age of the population rose to about 38 years. 

77 

 
According to Monstat (labour force survey) data for 2019, the total workforce in Montenegro is 279 900 (active 
population). Of those, 243 800 people were employed, while 43 400 (15.1 %) were unemployed. The number of 
employees  increased  by  2.7 %  compared  with  the  previous  year  (2018).  Monstat  regularly  publishes  data  on 
employment in the agricultural sector. In 2019, 17 400 persons were employed in agricultural activities, which 
made up 7.1 % of the working population. 

The distribution of educational attainment among all working persons on family agricultural holdings (98 341) is 
as  follows:  3.89 %  have  no  education,  5.81 %  have  an  unfinished  primary  education,  27.93 %  have  a  primary 
education, 53.26 % have a secondary education and 9.09 % have a post-secondary or higher education (32). 

Agriculture and rural development is one of the priority areas for development in Montenegro, with the aim 
being to provide safe and stable quantities of food and, through the supply of quality agricultural products and 
raising competitiveness, to encourage sustainable economic growth and development with sustainable resource 
management (Government of Montenegro, 2014). A large number of farmers have been helped; however, rural 
infrastructure is still not well maintained. It is essential that rural areas have paved roads, local centres, internet, 
a water supply, daily waste disposal services, local passenger transport and the like. 

5.3.  National policy framework 

Montenegrin agriculture is still developing under the guidance of the strategic framework for 2016–2020. The 
country  was  given  six  benchmarks  to  reach  in  Chapters 11,  12  and  13  of  the  closing  negotiation  and  their 
implementation is a priority. One of the main challenges in the coming period will be the accreditation of the 
Directorate  for  Payments,  which  will  be  entrusted  with  implementing  the  budget  provided  by  the  European 
Commission  for  EU  pre-accession  support  in  the  field  of  agriculture  and  rural  development.  Along  with 
institutional development, it is also necessary to work on strengthening the staffing capacities of the ministry, 
with a special focus on the Directorate for Payments, as the accreditation of this institution is conditional on the 
existence  of  a  sufficient  number  of  quality  and  well-trained  staff,  as  stated  in  the  findings  of  the  European 
Commission audit (European Commission, 2020a). 

To meet the basic goals of agricultural development in Montenegro (i.e. to ultimately have a sustainable and 
competitive  sector,  which  stimulates  balanced  economic  development  in  rural  areas,  while  maintaining  the 
stability of the rural population’s income and maintaining stability in the food supplies produced according to 
the  highest  standards  of  food  safety),  Montenegro  continues  to  make  investments  in  the  agriculture  sector, 
including the nearly EUR 100 million invested in agriculture between 2016 and 2020 (MARD, 2020c). Montenegro 
continues to implement  the activities  envisaged by the strategy for the development  of agriculture and rural 
areas  for  2015–2020  and  the  action  plan  for  acquis  alignment  with  Chapter 11  (agriculture  and  rural 
development). To meet the objectives stated in these documents, many activities have been carried out. 

The policy for the development of agriculture and rural areas aims to improve living conditions in rural areas, 
improve the living standard of agricultural producers, provide the necessary investments in infrastructure and 
improve the production process, increase the competitiveness of domestic producers and improve processing 
capacities,  provide  support  for  preserving  traditional  products,  etc.  Through  rural  development  measures, 
simultaneous efforts are being made to strengthen institutional capacities, with the main goal being to prepare 
the sector for future membership of the EU and the possibility of using EU funds (IPARD) (European Commission, 
2020b). 

Support  in  the  form  investments  in  agricultural  holdings  provided  through  the  Montenegro  institutional 
development  and  agriculture  strengthening  (MIDAS)  project  began  in  2016.  The  positive  experience  of  this 
project helped the MARD, through support for institutional building and support for agricultural producers, to 
ensure the system was ready for the implementation of the IPARD II programme. MIDAS additional funding has 
provided support to the MARD by providing funding for the identification of measures by the rural development 
programme and the creation of a pilot system to support producers in line with EU rules. This project has also 
contributed to the MARD continuing to build a system for the implementation of various support schemes, all in 
accordance with  Chapter 11 (agriculture and rural development) of the  acquis. Through this project, financial 
support is provided for organic production. With this support, the MARD continues to strengthen its advisory 
services  by  continuing  to  provide  practical  training  in  the  application  of  the  future  IACS  implementation 

(32)   As described by Monstat, full-time engagement was counted by using the annual work unit as an employment equivalent. The time 
spent working on the holding is considered the time spent working in agriculture, excluding holding work. For full-time employment, 
1 800 hours are taken to be the minimum for Montenegro (225 working days of 8 hours each). Farm work is separated from additional 
activities. 

78 

 
                                           
mechanism.  Direct  support  in  the  form  of  grants  for  agricultural  producers  will  be  implemented  using  an 
advanced system of administrative and technical controls. To receive such support the recipient must have arable 
land used for agricultural production. In line with the above-mentioned measure to support the development of 
the Directorate for Payments, geographical mapping was undertaken to produce plots for the future LPIS and an 
initial version of the software was created for requests for organic production support. 

The current project that aims to establish an LPIS in Montenegro is supported under the IPA (EU). The hardware, 
software and orthophotos necessary to establish the LPIS have also been provided with the support of EU IPA 
funds (Government of Montenegro and MARD, 2020) to support the classification of land cover types based on 
the interpretation of new orthophotos. 

The diversity of Montenegro’s geological elements, regions, climate and soil, as well as the very good position of 
Montenegro  in  the  WBs  and  the  Mediterranean,  have  created  ideal  conditions  for  the  emergence  of  rich 
biodiversity and puts the country in the so-called diversity ‘hot spot’, with European and world importance. The 
number of  species in a  unique area  (the S/A index) in Montenegro  is 0.837, the highest  among all European 
countries (MSDT, 2011). To respond to the pressures on the country’s biodiversity, in 2010 Montenegro adopted 
a national biodiversity strategy and action plan for of 2010–2015. As highlighted in these documents, everyday 
anthropogenic activities have various effects on the environment. The use of land and its modification for the 
needs of the population, besides the impact on nature’s balance, also affects human health. Some sectors, such 
as energy, transport and industry, exert direct pressure on nature and contribute to decreases in biodiversity, 
whereas  others,  such  as  agriculture,  forestry  and  fisheries,  directly  depend  on  the  state  of  the  environment. 
Agriculture is not the main environmental polluter, but actions are still needed to prevent the negative effects 
of this sector on the environment  (MSDT, 2014). Agriculture’s contributes to land degradation and measures 
have  been  proposed  to  tackle  this  (MSDT,  2015).  The  main  pressures  exerted  by  agriculture  are  related  to 
urbanisation in some areas and changes in land usage (from agriculture to construction), erosion in certain areas 
(including in agriculture areas) and the inappropriate use of pesticides, which can pollute the water. The low level 
of awareness of the importance of biodiversity also represents a pressure on biodiversity. Even though there is 
a lack of data and biodiversity is not monitored to the full extent, the MARD has supported agricultural producers 
through several measures in order to reduce the pressure of agriculture on the environment in Montenegro. 

Certain measures are implemented through the national agri-budget to reduce the pressure on biodiversity and 
to  ensure  the  extraction  of  natural  resources  is  undertaken  in  a  sustainable  way,  such  as  (Government  of 
Montenegro and MARD, 2014): 

—  support for organic production, focusing on reducing the negative impact of agriculture on the environment, 
the  conservation  of  biodiversity,  increasing  the  quality  of  agricultural  products  and  contributing  to  the 
affirmation of Montenegro as an ecological state; 

—  support for the use of mountain pastures, namely the conservation and sustainable use of natural resources, 
the sustainable management of agricultural land, environmental protection, the preservation of biodiversity, 
the maintenance of cultural and natural heritage, and preventing the conversion of agricultural  land into 
forest land; 

—  support  for  preserving  autochthonous  genetic  resources  in  agriculture,  namely  the  preservation  and 
sustainable use of endangered autochthonous and local breeds of livestock and of plant species that are 
threatened by genetic erosion, as well as contributions to the preservation of biodiversity. 

In 2013, the MARD adopted the code of good agricultural practice, which gives advice on how to produce food 
in a way that takes into account the preservation of the environment. Its recommendations enable Montenegrin 
agricultural producers to protect agricultural land; to keep rivers, lakes and shallow water clean and healthy by 
avoiding pollution with nitrates and using pesticides safely; and to protect farmers, consumers, animals and the 
environment. The code of good agricultural practice addresses all of the issues identified as pressures in the 
action  plan  for  fighting  land  degradation  and  mitigation  of  the  consequences  of  drought  in  Montenegro.  To 
address  these  pressures,  the  MARD  conducted  a  public  campaign  to  promote  good  agricultural  practice 
(Government of Montenegro and MARD, 2014). 

Direct  positive  impacts  on  soil,  water,  air  and  the  climate  can  be  expected  through  the  construction  and/or 
reconstruction  of  manure  storage  capacities,  including  equipment  for  its  handling  and  use,  and  through  the 
application of good agricultural and environmental practices. Investments in stonewalls, fences, etc., can also 
contribute to decreasing the above-mentioned pressures. 

79 

 
5.4.  Measures and budgetary support for agriculture and rural development 

The most important form of state support for agricultural development is provided through the agri-budget. The 
agri-budget  provides  incentives  in  the  form  of  grants,  allocated  from  Montenegro’s  total  budget  for  the 
development of agriculture and rural areas. The agri-budget includes detailed budgetary lines (programmes) with 
the  elements  required  to  be  eligible  (reasons  for  support,  objectives,  description  and  eligibility  criteria, 
beneficiaries, procedures, financial plan, supervision, etc.). 

The government is focused on developing the agriculture sector for both domestic use and the growing tourism 
sector.  Incentives  provided  to  the  agriculture  sector  principally  comprise  government  subsidies.  The  total 
planned incentives for the agriculture sector in 2017, 2018 and 2019 were EUR 31.5 million, EUR 39.95 million 
and EUR 52.4 million, respectively. In addition to subsidies, the government has offered other relief measures to 
target  economic  growth  in  agriculture.  The  gradual  rise  in  subsidies  is  expected  to  continue,  with  a  planned 
increase of a minimum of EUR 1 million per year over the next 4 years. To strengthen the food production sector, 
significant funding is available to Montenegrin producers (from the MIDAS World Bank project, the pre-accession 
funds for rural development and the national budget). During 2018, about EUR 16.7 million was invested in the 
agricultural sector. Support from IPA funds amounted to EUR 2.6 million (with total investment amounting to 
EUR 4 million). Support provided through agri-budget measures amounted EUR 14.1 million and was composed 
of  direct  support  measures  (subsidies)  and  measures  aimed  at  supporting  investment  in  rural  areas,  such  as 
support for raising new plantings, increasing livestock stock and purchasing equipment and machinery (MARD, 
2020d). 

The  consolidated  domestic  support  policy,  which  is  financed  from  the  national  budget,  is  divided  into  rural 
development  measures  and  measures  of  direct  support.  Rural  development  measures  relate  to  payments 
directed  at  farms  aiming  to  improve  product  quality,  develop  organic  production,  diversify  production, 
strengthen the processing on farms, etc. The sectors supported through direct support measures WERE livestock, 
milk production, cereals, crops and tobacco. There were also certain programmes of payments in the beekeeping 
sector. 

Rural development measures make up the dominant proportion of measures. In the future, reforms to the policy 
of direct payments will aim to reduce the number of measures concerning related payments and the separation 
of payments from production. Changes in agricultural policy, but also the structure of all budgetary support to 
agriculture for 2010–2019, are presented in Figure 38. 

The realised funds differ from those that were planned. Each year, the subsidy funds planned were fully realised, 
but the funds for investments were not. Therefore, the ministry must further encourage farmers to invest more. 
The lower level of investments was the result of the low degree of competitiveness in Montenegrin agriculture 
in relation to imported products; therefore, increasing agricultural production is always a  risk  because of the 
pressure  posed  by  imported  products.  In  addition,  retailers  do  not  want  to  take  any  chances  with  domestic 
production, mainly because of the problem of only small quantities being produced. 

Three fields of assistance have been defined in the structure of the agriculture budget: agriculture, fisheries and 
operational  programmes.  Agriculture  as  field  of  assistance  includes  market-price  policy  measures,  rural 
development  measures,  assistance  for  general  services  and  agriculture  services,  social  transfers  for  the  rural 
population,  and  technical  and  administrative  assistance  for  the  programme  implementation.  Assistance  for 
fisheries involves supporting the development of the sea fisheries and mariculture sector and supporting the 
development  of  the  freshwater  fisheries  and  aquaculture  sector.  The  operational  programmes  comprise  a 
programme for food safety measures, a programme for compulsory animal healthcare measures, a programme 
for phytosanitary measures, and a programme for the development and strengthening of capacities in the food 
safety, veterinary medicine and phytosanitary fields (MIDAS 2). 

In  2019,  a  total  of  53  measures  were  defined.  The  majority  (24)  of  these  measures  are  related  to  rural 
development,  amounting  to  EUR 32.67 million  (i.e.  62 %)  of  the  overall  agriculture  budget.  For  market-price 
policy measures, a total of EUR 7.98 million was allocated through 10 measures, increasing by EUR 1.37 million 
compared with the previous year (2018). 

The overall agricultural budget for 2019 was higher than that planned, namely by € 12 411 700 or 23.8%, owing 
to  much  greater  assistance  provided  to  agricultural  producers  and  fisheries  than  planned,  amounting  to 
EUR 42 million (i.e. 70.2 % more than intended). Agriculture budget beneficiaries (except for fisheries) must be 
entered in the farm register (MARD, 2020e). Market-price policy measures are divided into direct payments, a 

80 

 
programme for special wine support measures (a new measure), a programme for beekeeping improvement and 
market stabilisation measures. An overview of the market and direct support measures is given in Figure 39. 

In 2019, within the framework of market stabilisation measures related to the distribution of fruits, vegetables 
and dairy products in schools, a project was implemented in seven schools whereby apples, carrots and yoghurts 
were distributed (26 313 meals). This measure has become very popular, with many schools having asked to be 
part of the project. 

Figure 38. Total budgetary support to agriculture (2010–2019) 

Source: ME APMC database (2020). 

In addition, in the programme ‘Buy Domestic’, launched by the Government of Montenegro in cooperation with 
the Chamber of Commerce of Montenegro, the largest chains of trade and manufacturers participated, with the 
aim  of  strengthening  the  domestic  economy  by  increasing  the  availability,  positioning  and  consumption  of 
Montenegrin products in the domestic market. In 2019, as the second phase of the programme, the  ‘domestic 
tastes’  project  was  launched,  with  the  aim  of  involving  the  tourism  industry  in  the  promotion  and  better 
marketing of Montenegrin products and services. 

Under  a  new  measure,  milk  processing  on  farms  is  supported  by  a  basic  premium  of  0.06 cents  per  litre  of 
processed milk. The condition for obtaining the premium is that the holding is registered with the Directorate for 
Food, Veterinary and Phytosanitary Affairs, in accordance with the decree on hygiene requirements for facilities 
and premises producing small quantities of primary products for human consumption. A total of EUR 1.78 million 
was paid out for on-farm milk processing in 2019. The total number of beneficiaries entitled to this premium was 
1 537. The total quantity of on-farm processed milk covered by these premiums was about 30 million litres of 
milk, from which over 3 500 tonnes of cheese and cream were produced and marketed (MARD, 2020e). 

81 

 
 
 
Figure 39. Market and direct support measures (2010–2019) 

Source: ME APMC database (2020). 

Rural development measures are divided into three categories: (i) measures to strengthen the competitiveness 
of  food  producers  (support  is  provided  to  modernise  production  and  strengthen  competitiveness,  improve 
product  quality,  introduce  new  technologies  and  innovations,  and  introduce  new  market  opportunities),  (ii) 
measures for the sustainable management of natural resources (support is given for the cultivation of indigenous 
livestock breeds and the cultivation of indigenous plant varieties) and (iii) measures to improve quality of life and 
expand economic activities in rural areas (support is provided for the improvement of rural infrastructure and 
especially for electricity network development projects in rural areas, as well as for the use of solar energy and 
the  adaptation  and  reconstruction  of  existing  infrastructure).  It  is  also  important  to  mention  that  rural 
development measures are gradually being aligned with the priorities of the EU CAP for 2014–2020. Figure 40 
illustrates the structural and rural development measures in Montenegro over the last decade. 

The  rural  clustering  and  transformation  project  is  the  first  International  Fund  for  Agricultural  Development 
(IFAD)-financed  project  in  Montenegro.  The  project’s  overall  goal  is  to  contribute  to  the  transformation  of 
smallholders’ livelihoods in northern Montenegro, enabling them to become more competitive and resilient to 
climate change. The development objective of this project is to increase the participation of poor smallholders 
in an inclusive, profitable and environmentally sustainable value chain, and to enhance the benefits they derive 
this (the project’s total cost is USD 14.48 million). As Montenegrin agriculture is in need infrastructure and an 
association of producers, during the first year of implementation of this project there was already considerable 
interest among local communities and agricultural producers. 

Figure 40. Structural and rural development measures (2010–2019) 

Montenegro has experienced a positive trend when it comes to supporting the fisheries sector, in terms of the 
implementation of measures to support marine and freshwater fisheries and related sectors. 

Source: ME APMC database (2020). 

82 

 
 
 
Figure 41. Other measures related to agriculture (2010–2019) 

Source: ME APMC database (2020). 

Regarding IPARD II, the total amount planned for the 2014–2020 programming period was EUR 51.7 million, out 
of which EUR 39 million was EU contributions. The first payments were made in 2019, namely for measures 1 
(EUR 0.40 million) and 3 (EUR 1.42 million); therefore, total expenditure amounted to EUR 1.82 million. In 2019, 
the proportion of total structural and rural development payments under IPARD II was 18.1 %. Other measures 
related  to  agriculture  have  been  implemented  for  years  in  support  of  agricultural  development,  through  the 
implementation of measures to improve food safety, engagement in expert support, education, study trips, social 
transfers, etc. (Figure 41). 

5.5. 

EU approximation process 

The implementation of the activities set out in the action plan for harmonisation with the acquis continues. In 
line with the dynamics set out in the action plan, the implementation of EU-like trade mechanisms has started, 
in part concerning the administration of quotas. Specifically, preparations have begun for the implementation of 
activities related to the establishment of systems for the implementation of trade mechanisms and the creation 
of software to be funded by the IPA 2018 fund. The revised EU acquis compliance action plan was submitted to 
the  European  Commission  after  modifications  agreed  with  colleagues  from  the  Directorate-General  for 
Agriculture  and  Rural  Development  and  the  Directorate-General  for  Neighbourhood  and  Enlargement 
Negotiations. 

It was agreed that, through the IPA 2018, the establishment of electronic databases would be financed, namely 
for  the  construction  of  a  wine  register,  the  construction  of  a  register  of  fruit  and  vegetable  traders,  the 
construction of a system for implementing trade mechanisms and the construction of an EU information system 
for agricultural market management and monitoring (i.e. a model price reporting system). 

The final version of the revised acquis compliance action plan has been submitted to the European Commission 
for consideration. The agri-budget for 2019 continued to align its direct payment policies and introduced new 
measures  related  to  compliance  with  the  CMO  policy  and  related  to  the  wine  sector,  school  schemes  and 
producer organisations. In addition to rural development measures and per hectare support, winemakers have 
been able to use CMO support since 2019 for vineyard restructuring, conversion and promotion. In addition, the 
implementation of the pilot programme entitled ‘Fruits, vegetables, milk and milk products for schools’ for the 
2019/2020 school year, in line with other EU programmes, was important. 

In  2018,  a  technical  specification  was  developed  for  a  geospatial  application  for  support  management,  with 
support from the EU IPA 2017. The application was developed through additional funding from the institutional 
development and agricultural strengthening project of Montenegro. In the second quarter of 2018, the MAFRD 
announced a tender for the development of the payment portion of the application under the contract for the 
geospatial application for support management. The application was created using a parametric approach, which 
means that each measure will have its own special module that needs to be adjusted. 

In  2019,  an  initial  layer  was  added  to  the  LPIS,  with  agricultural  land  mapped  and  digitised.  The  necessary 
mechanisms  are  in  place  for  a  fully  functioning  LPIS,  which  will  be  complete  after  the  establishment  of  the 
regional  offices  of  the  future  Paying  Agency,  whose  establishment  is  ongoing.  Currently,  in  the  LPIS,  2 049 
holdings have registered a total of 5 533 parcels, covering 2 842.2 ha (MARD, 2020e). 

83 

 
 
During  2019,  the  standard  output  coefficient  for  2013  was  updated;  this  will  be  an  integral  part  of  the  farm 
typology and will be used for selecting farms in the FADN system. A new project was launched in the middle of 
2020, funded by the FAO and with additional support from IPA funds, focusing on the complete establishment 
of the FADN system in accordance with EU requirements. It is expected that around 200 agricultural holdings will 
be  included  in  the  survey  sample  in  Montenegro,  from  which  data  will  be  collected  by  the  ministry’s  expert 
associates,  together  with  FAO  experts.  Following  the  preparation  of  the  preliminary  farm  plan,  it  can  be 
concluded that crop production agricultural holdings are not well represented in the plan, which can probably 
be attributed to the outdated structure of agricultural holdings from the 2010 census and the absence of a new 
farm typology based on the data from the farm structure survey for 2016 (MARD, 20202). 

In accordance with the rules on the procedure and conditions for the allocation of preferential customs quotas 
for the import of agricultural products (Official Gazette of Montenegro 2/19), a public invitation for the allocation 
of preferential quotas for 2020 was issued. The allocation of preferential quotas will be made according to a 
reciprocity  system,  for  all  preferential  quotas  above  100 tonnes,  prescribed  by  the  applicable  free  trade 
agreements. 

Regarding  the  continuation  of  the  accreditation  of  measures  within  the  IPARD II  programme,  after  adopting 
amendments  to  the  IPARD II  programme,  Montenegro  officially  submitted  a  request  to  the  European 
Commission to implement the budget for measure 7 (the diversification of farms and business development). 
The implementation of this measure is expected in 2020 after receiving the certificate. Montenegro, through the 
National IPA Coordinator office, sent an official letter to the European Commission requesting an extension of 
the IPARD II deadline for the action plan for 2020, stating that activities to implement public calls and contracted 
investments would be undertaken as quickly as possible (MARD, 2020e). In addition, the MARD is working to 
create  a  favourable  financial  environment  for  agricultural  producers,  both  through  loans  provided  by  the 
Investment and Development Fund and by creating similar opportunities for financing investments through loans 
offered by commercial banks. 

5.6.  Discussion, conclusions and recommendations 

There is no fully functioning payments agency in Montenegro that is in charge of implementing agricultural policy 
measures. The Directorate for Payments is the designated organisational unit of the ministry that performs the 
tasks of the IPARD agency, that is, manages payments from pre-accession funds for rural development and the 
national budget. Montenegro does not have an IACS that is fully compliant with EU rules. Entry in the register of 
agricultural holdings is obligatory for agricultural holders applying for incentives or support and for producers of 
agricultural products intended for the market. The application process for the farm registry is done automatically 
through a software application. In Montenegro, the establishment of the FADN is under way. The big drawback 
is that the FADN is not functional and, even when it does become functional, Monstat does not publish data on 
economic accounts in agriculture; therefore, agricultural policy is based not on figures, but on the assessment of 
priority areas that are traditionally significant and important. During 2018 and 2019, all perennial plantations 
(orchards, vineyards, olive groves and plantations of MAPs) in the direct payment system were introduced into 
the  LPIS.  In  this  way,  the  control  system  was  improved.  It  is  necessary  to  reinforce  structures  related  to  the 
digitisation of agriculture, as this will increase the competitiveness of conventional Montenegrin agriculture. On 
the other hand, organic agriculture needs to be further strengthened and traditional agricultural production thus 
encouraged. 

New  investments  are  needed  in  the  agricultural  sector,  as  this  will  also  increase  the  competitiveness  of 
production and reduce the dependence on food imports. Exports of dried and smoked meats, meat products, 
fruit,  wine,  beer,  spirits  and  essential  oils  have  also  been  recorded  in  the  last  few  years.  The  production  of 
traditional products on farms provides the opportunity to develop short value chains, which will result in better 
control  of  food  security,  a  reduction  in  the  grey  market  and,  of  course,  additional  income  for  the  producers 
themselves. Improving supply and rural tourism development would valorise Montenegro’s natural resources in 
a sustainable and inclusive way, while creating jobs in rural areas. Agricultural policy measures should support 
women and young people more strongly, in such a  way as to encourage employment in the food production 
sector. 

However, it should be noted that no major changes occurred in the period analysed, although a much larger 
number of farmers received support than in the previous period. This is also demonstrated by the fact that many 
more producers are registered with the ministry and with other organisations dealing with agriculture. National 
budget allocations to agriculture have increased, but they are still not even close to what agriculture, along with 

84 

 
the processing industry, contributes to the overall economy. Organic agriculture needs to be strengthened and 
new  measures  need  to  be  taken  in  line  with  the  future  CAP,  particularly  regarding  improving  environmental 
protection and reducing pollution. In addition, it is necessary to introduce new measures for the digitalisation of 
agriculture, because world industrialisation in agriculture has resulted in Montenegrin traditional agriculture no 
longer being competitive. Such digitalisation is important to promote the widespread use of the food produced 
and to strengthen organic farming. 

Montenegro does not have the capacity to be competitive in the market of the main agricultural products of the 
EU owing to its natural predispositions and unorganised participation in the market (i.e. small-scale agriculture 
and  unfavourable  structures  of  farms),  but  it  has  the  potential  to  develop  the  production  of  high-quality 
agricultural and food products in an innovative and traditional way. The Montenegrin market for agricultural 
products  is  completely  unstructured,  so  there  is  very  little  protection  against  competition  from  imported 
products. Agricultural producers are not able to  supply chains with their products throughout the year, which 
puts them into a non-competitive position with those who sell imported goods. Large commercial chains are not 
willing to  stop importing agricultural products during Montenegro’s  seasonal production, because this  would 
endanger  their  business  and  planned  profits.  This  has  a  significant  impact  on  the  planning  of  agricultural 
production and, consequently, on the development of overall Montenegrin agriculture, and the most common 
reason for this is that agricultural producers are aware that they cannot be competitive in relation to imported 
products. 

Agriculture  projects  have  contributed  to  the  transformation  of  the  lifestyles  of  smallholders  in  northern 
Montenegro, enabling them to become competitive and resilient to change. The knowledge among agricultural 
producers is good and they are experienced in farming, but they must be properly trained. Farmers with greater 
investment and support can improve their household economic situation and then help to ensure the stability of 
rural communities. Plant production is quantitatively increasing and revenues are increasing. Transportation has 
improved. Although farmers are aware of the opportunities, the possibilities for increased stability of household 
income should be further promoted, which would improve agriculture in general. Provisions should be made for 
direct training in digitalisation in agriculture and climate change, support for organisations working in this field, 
and support for the media and non-governmental organisations to promote these topics. Support for agricultural 
producers  must  be  continued  in  order  to  strengthen  Montenegrin  agriculture,  create  new  opportunities  for 
young farmers and increase  production. Finally, the key aspects of improving Montenegrin agriculture are to 
promote domestic agricultural products and to increase their competitiveness with imported products, while 
also using tourism as a promotional tool. 

References 

European  Commission  (2020a),  Report  of  the  European  Commission  on  Montenegro  for  the  Period  from 
1 January  2019–1 November  2019  (Chapter 11 –  Agriculture  and  Rural  Development),  European  Commission, 
Brussels. 

European  Commission  (2020b),  ‘Apply  for  EU  pre-accession  funding  for  rural  development  (IPARD)’ 
(https://ec.europa.eu/info/food-farming-fisheries/farming/international-cooperation/enlargement/pre-
accession-assistance/apply-funding_en) (accessed 23 April 2020). 

FAO (2017), Project for the Establishment of the FADN System in Montenegro, Podgorica. 

Government  of  Montenegro  (2014),  Montenegro  Regional  Development  Strategy  for  the  Period  2014–2020, 
Podgorica. 

Government of Montenegro and MARD (2014), Programme for the Development of Agriculture and Rural Areas 
in Montenegro under IPARD II 2014–2020, Podgorica. 

Government of Montenegro and MARD (2020), Project: Establishment of hardware and software infrastructure 
and the provision of ortho-imagery for the setup of an LPIS in Montenegro, Podgorica. 

MARD (2020a), Report of Directorate for Paying, Podgorica. 

MARD (2020b), Information of Foreign Trade for 2019, Podgorica. 

MARD (2020c), Report of Directorate for Rural Development, Podgorica. 

85 

 
 
MARD (2020d), Agrobudgets for 2017, 2018, 2019, 2020, Podgorica. 

MARD (2020e), Report on Work and Situation in Administrative Areas of the Ministry of Agriculture and Rural 
Development and Administration Body for 2019, Podgorica. 

MSDT  (Ministry of Sustainable Development  and Tourism) (2011), First  Report  on the Implementation of the 
National Strategy of Biodiversity with Action Plan, Podgorica. 

MSDT  (2014),  Fifth  National  Report  of  Montenegro  Towards  the  UN  Convention  on  Biological  Diversity, 
Podgorica. 

MSDT  (2015),  Action  Plan  for  Fighting  Land  Degradation  and  Mitigation  of  the  Consequences  of  Drought  in 
Montenegro, Podgorica. 

Monstat (2017), Section FSS 2016, Monstat, Podgorica. 

Monstat (2020) Annual statement of foreign trade, Monstat, Podgorica 

Monstat (2020a), Section Agriculture – Producing statistics, plant productions, Monstat, Podgorica. 

Monstat (2020b), Section Agriculture – Producing statistics, livestock productions, Monstat, Podgorica. 

WTO (2020), Trade Policy Review of Montenegro, Section Agriculture, WTO, Geneva. 

86 

 
6.  CASE STUDY: NORTH MACEDONIA 

Ana Kotevska, Aleksandra Martinovska Stojcheska, Ivana Janeska Stamenkovska, Dragi Dimitrievski (33) 

6.1. 

Introduction 

European integration and gaining full membership to the EU is the top priority on North Macedonia’s agenda. 
The country gained candidate status in 2005, but  only in March 2020 did the EU give its formal approval for 
accession talks with North Macedonia to begin. This marked a new phase in the integration process, namely the 
start of intensive policy reforms and work for alignment with the community acquis. The European perspective 
sets out the basic direction of the country’s agricultural and rural development policy and as such has influenced 
the country’s legal, administrative  and institutional set-up, as well as its strategic orientation, which tends to 
align with the EU CAP. 

The  aim  of  this  chapter  is  to  present  the  latest  developments  in  the  agricultural  policy  framework  of  North 
Macedonia  and  its  harmonisation  with  the  CAP,  with  a  specific  focus  given  on  the  socioeconomic  aspects  of 
agriculture and rural development. The chapter is a continuation of a series of previous studies (Dimitrievski and 
Kotevska, 2008; Dimitrievski et al., 2010, 2014, 2016, 2017), which have provided continuous insights into the 
agricultural sector and its corresponding policy development since 2008. This report uses three main sources: (i) 
the agricultural statistics database for North Macedonia – StatDatabase (2020), which builds on the official data 
from the State Statistical Office; (ii) the APMC database for 2020 (Rednak and Volk, 2010, 2013, 2018), which is 
based on data obtained from the Agency for Financial Support of Agriculture and Rural Development (AFSARD), 
and refers to the annual payments from the support programmes, and supplemented with data from the final 
financial  statements  of  the  national  budget;  and  (iii)  a  review  of  the  formal  policy  documents  and  related 
research studies. The databases cover 2010 to 2019 (although for some  indicators the period ends in 2018 or 
2020, depending on the latest data available), but the report mainly focuses on the recent developments in the 
sector and its related policy, since 2017. 

6.2. 

State of the agri-food sector 

North Macedonia has made significant  efforts to reform its economy over the last  decade, as a  small upper-
middle-income country (World Bank, 2019). During 2010–2019, there was evident growth in the country’s GDP, 
which  reached  EUR 11.34 billion  in  2019  (Table 20).  After  economic  growth  of  2.7 %  in  2018,  the  economy’s 
growth  accelerated  in  2019,  with  an  estimated  growth  rate  of  3.6 %  in  that  year,  mainly  stemming  from  an 
increase  in  private  consumption  (including  the  effect  of  the  rise  in  minimum  wage),  export  stability  in  the 
traditional sectors (including the food industry) and export growth in new production capacities (Government of 
the Republic of North Macedonia, 2019). This economic growth was followed by the lowest unemployment rate 
in the last decade (17.3 % in 2019). The unemployment rate  is nevertheless still high and contributes to high 
poverty rates. Moreover, the robust growth seen has been strongly affected by the ongoing COVID-19 pandemic 
crisis, with a reversal of growth in all aspects, including unfavourable effects to GDP and trade and an increase 
in unemployment. 

North  Macedonia’s  agricultural  sector  contributed  10.7 %  to  GVA,  on  average,  during  2010–2019,  with  this 
proportion gradually falling to 9.6 % in the last 3 years analysed (Table 20). As one of the most important sectors 
in the economy of North Macedonia, agriculture employs  a  significant  number of people; during 2010–2016, 
agriculture made up, on average, 18 % of total employment but, since then, this proportion has been decreasing, 
reaching  its  lowest  recorded  level  of  13.9 %  in  2019.  This  decrease  is  due  to  both  the  overall  increase  in 
employment in absolute figures (an increase of 122 000 new jobs was recorded) and the parallel decrease in jobs 
in agriculture (there was a decrease of 11 300 persons engaged in agriculture from 2010–2016 to 2019). The 
reasons behind this decrease require additional investigation. The decreasing trend in employment in agriculture, 
combined with its high proportion of GDP, puts North Macedonia in the category of  urbanised countries with 
significant economic growth (World Bank, 2015). 

In terms of trade, the proportion of agri-food product exports among total exports decreased during the last 3 
years of the period analysed  (i.e. from an average of 14 % in 2010–2016 to 10 % in 2019). Agri-food imports 

(33)   Association of Agricultural Economists of North Macedonia/Ss. Cyril and Methodius University in Skopje, Faculty of Agricultural Sciences 
amartinovska@fznh.ukim.edu.mk, 

ana.kotevska@fznh.ukim.edu.mk, 

and 
Macedonia; 
ijaneska@fznh.ukim.edu.mk, ddragi@fznh.ukim.edu.mk 

Skopje, 

North 

Food, 

87 

 
                                           
followed the same trend, making up an average of 12.3 % of total imports in 2010–2016 to 10 % of total imports 
in 2019 (Table 21). 

Table 20. Macroeconomic indicators 

Indicator 

2010 

2011 

2012 

2013 

2014 

2015 

2016 

2017 

2018 

2019 

GDP (at current prices, 
million EUR) 

Value added (at 
current prices, million 
EUR) 
Economic growth (real 
change in GDP, %) 
GDP per capita (EUR) 
GDP  per  capita  in  PPS 
(EU=100; %) 

Inflation %) 

Total 
(thousand persons) 

employment 

Unemployment 
(%) 

rate 

7 109 

7 544 

7 585 

8 150 

8 562 

9 072 

9 656 

10 038 

10 698 

11 340 

6 132 

6 491 

6 561 

7 092 

7 435 

7 927 

8 370 

8 700 

9 286 

9 899 

3.4 

2.3 

–0.5 

2.9 

3.6 

3.9 

2.8 

1.1 

2.7 

3.6 

3 459 

3 665 

3 680 

3 948 

4 141 

4 382 

4 659 

4 839 

5 153 

5 463 

34 

34 

34 

35 

36 

36 

37 

37 

37 

38 

1.6 

3.9 

3.3 

2.8 

–0.3 

–0.3 

–0.2 

1.4 

1.5 

0.8 

637.9 

645.1 

650.6 

678.8 

690.2 

706.0 

724.0 

740.6 

759.1 

797.7 

32.1 

31.4 

31.0 

29.0 

28.0 

26.1 

23.7 

22.4 

20.7 

17.3 

PPS, purchasing power standards. 

Note: Preliminary data. 

Source: MK StatDatabase (2020).  

Considering the higher level of imports than exports in the trade of agri-food products, North Macedonia is a net 
importer of agri-food products that is constantly faced with a negative trade balance, which reached its highest 
value of EUR –246.3 million in 2018. The export/import coverage rate was, on average, 73 % in 2010–2019, thus 
revealing the country’s agri-food import dependency. 

88 

 
Table 21. Key agricultural statistics 

2010 

2011 

2012 

2013 

2014 

2015 

2016 

2017 

2018 

2019 

GVA of the agriculture, forestry, hunting and fishery sector 

GVA (at current prices, 
million EUR) 

Proportion  out  of  all 
activities (% of GVA) 

719.5 

705.4 

690.6 

807.6 

871.5 

882.5 

885.7 

790.3 

913.4 

994.5 

11.7 

10.9 

10.5 

11.4 

11.7 

11.1 

10.6 

9.1 

9.8 

10.0 

Employment in the agriculture, forestry, hunting and fishery sector 

Number 
persons) 

(thousand 

Proportion out of total 
employment (%) 

121.5 

120.9 

112.5 

127.2 

127.4 

126.1 

120.3 

120.3 

119.3 

111.0 

19.1 

18.7 

17.3 

18.7 

18.5 

17.9 

16.6 

16.2 

15.7 

13.9 

Trade in food and agricultural products 

Exports  of  agri-food 
products (million EUR) 

Proportion  out  of 
exports of all products 
(%) 

Imports  of  agri-food 
products (million EUR) 

Proportion  out  of 
imports of all products 
(%) 

Agri-food 
balance (million EUR) 

trade 

418.2 

458.9 

470.3 

495.5 

479.6 

480.7 

525.9 

530.0 

541.3 

621.3 

16.5 

14.3 

15.1 

15.3 

12.8 

11.8 

12.0 

10.6 

9.2 

9.7 

527.7 

611.9 

672.9 

648.6 

643.0 

695.7 

713.7 

755.7 

787.6 

832.1 

12.8 

12.1 

13.3 

13.0 

11.7 

12.0 

11.6 

11.1 

10.3 

9.9 

–109.5  –153.0  –202.6 

–153.1  –163.4  –215.0  –187.8  –226 

–246.3  –210.8 

Export/import rate (%)  79.3 

75.0 

69.9 

76.4 

74.6 

69.1 

73.7 

70.1 

68.7 

74.7 

Note: Preliminary data. 

Source: MK StatDatabase (2020). 

Tobacco and tobacco products are the leading export commodity (making up 24 % of total agri-food exports), 
followed by beverages (12 %), cereal preparations (12 %) and vegetables (11 %). Agri-food imports include meat 
(14 %), edible preparations (9 %), and dairy, eggs and honey (7 %) (MK StatDatabase, 2020). 

In the last decade, exports to EU countries increased until they made up a greater proportion of total exports 
than  those  to  WB  countries/territories.  Imports  from  the  WB  countries/territories  have  also  decreased,  with 
imports  from  the  EU  countries  again  now  making  up  a  greater  proportion  of  total  imports.  This  is,  however, 
mostly due to the regrouping of countries since Croatia’s accession to the EU. Overall, exports and imports have 
remained relatively stable in terms of total trade (Figure 42). 

89 

 
 
 
 
 
Figure 42. Regional breakdown of agri-food trade in North Macedonia (%, 2010–2019) 

Exports

Imports

100%

80%

60%

40%

20%

0%

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

100%

80%

60%

40%

20%

0%

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

EU-27/28

WBs

Other countries

Source: MK StatDatabase (2020). 

Half  of  North  Macedonia’s  territory  (i.e.  1.26 million ha  in  2019)  is  categorised  as  agricultural  land,  with 
permanent pastures taking up 59 %, arable land covering about 33 %, meadows covering 5 %, vineyards taking 
up 2 % and orchards making  up 1 %. According to the latest  farm  structure  survey (2016), there are  178 125 
farms  and  320 738 ha  of  total  UAA  in  North  Macedonia.  Small-scale  farms  (utilising  less  than  1 ha  of  land) 
dominate, making up 60.8 % of all farms (Figure 43). The total number of agricultural households with livestock 
units is 98 702 (farm structure survey, 2016), with most farms (41 %) having only one livestock unit (Figure 44). 
The average farm size in the country is 1.8 ha, while the average farm has 2.1 livestock units. 

Figure 43. Number of agricultural holdings by farm size (ha) 

80.000

70.000

60.000

50.000

40.000

30.000

20.000

10.000

0

≤ 0.5

> 0.5 ≤  1

> 1 ≤ 3

> 3 ≤ 5

> 5 ≤  8

> 8 ≤ 10

> 10

2013 (total farms=170 885)

2016 (total farms=178 125)

Source: MK StatDatabase (2020). 

90 

 
 
 
Figure 44. Number of agricultural holdings with livestock (number of livestock units) 

45.000

40.000

35.000

30.000

25.000

20.000

15.000

10.000

5.000

0

> 0 ≤ 1

> 1 ≤ 3

> 3 ≤ 5

> 5 ≤  10 > 10 ≤ 20 > 20 ≤ 30 >  30 ≤ 50

> 50

2013 (total farms=96 631)

2016 (total farms=98 702)

Source: MK StatDatabase (2020).  

Crop production is dominant in the total agricultural output value, contributing 77 % compared with the 23 % 
contributed by livestock (State Statistical Office, 2019). The production structure in North Macedonia has not 
changed significantly in recent years; cereals are the most significant crop in terms of crop area, with the most 
significant crops being wheat (23 %), maize (11 %) and other grains (18 %). The proportion of vegetables in the 
total harvested area was about 11 % and permanent crops made up 10 % in 2019. 

During 2010–2016 crop production was stable with a slight increasing trend. However, the unfavourable weather 
conditions of 2017 caused significant losses for most crop products. Production recuperated in 2018. Domestic 
vegetable  production  is  experiencing  increasing  competition  from  imports,  especially  from  the  neighbouring 
countries/territories,  which  have  invested  in  production  technologies  enabling  earlier  and  more  competitive 
production. In addition, in the past few years, vegetable producers in North Macedonia have begun to shift to 
the production of fruit, which requires less labour input. 

Regarding  livestock  production,  milk  contributes  around  50 %  of  the  total  animal  output,  followed  by  cattle 
production with 19 % and pigs with 16 % of the total animal output (State Statistical Office, 2019). In 2019, there 
was an evident decreasing trend in the livestock numbers of all categories: pigs by 30 %, cattle and poultry by 
15 % each, and sheep and goats by 7 % each. This is also reflected in the decreased production output of the 
livestock sector, which requires further examination to determine the reasons behind this drastic drop. 

Organic agricultural production has shown a slow but steady increase in North Macedonia. During 2010–2019, 
the number of organic operators almost doubled. In terms of harvested area, organic production is still marginal, 
making  up  an  average  of  1 %  of  the  total  area  of  production.  Organic  livestock  farming  has  also  gained  in 
importance, especially in terms of increasing numbers of organic sheep and beehives. However, compared with 
the total livestock budget, the budget for organic livestock is far behind, although it is still important considering 
the increasing number of organic livestock producers from year to year. 

Agricultural output prices in the last few years have not recovered to the 2012–2015 level. Output prices dropped 
for both crop and livestock production in 2017. In the following years, prices slowly started to recover (Figure 45). 
There were also notable variations in agricultural inputs: the highest input prices occurred in 2012, falling sharply 
in 2015, and again increasing in the last 3 years analysed (Figure 46). 

91 

 
 
Figure 45. Output price indices (2015=100) 

140

130

120

110

100

90

80

70

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

Source: MK StatDatabase (2020).  

Figure 46. Input price indices (2015=100) 

120,0

115,0

110,0

105,0

100,0

95,0

Total
agriculture

Crop products

Animals and
livestock
products

Total input

Intermediate
consumption goods
and services

Investment goods
and services

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

6.3. 

Socioeconomic issues underlying rural areas 

Source: MK StatDatabase (2020). 

The national definition of a rural area is an administrative unit with a population of less than 30 000 inhabitants, 
as registered in the national population census (the latest being in 2002). In this context, the definition of rural 
areas  includes  three  groups:  (i)  settlements  located  in  municipalities  established  within  rural  centres  (rural 
municipalities), (ii) settlements situated in municipalities in urban centres with systems predominantly based on 
the use of agricultural or forest land and (iii) cities with populations of less than 30 000 people with the possibility 
of using agricultural and forest land. Based on this definition, rural areas cover around 88.7 % of the territory 
within 62 municipalities and are home to 47.5 % of the total population (MAFWE, 2019). 

In the last years analysed, many rural areas, especially small villages, experienced outmigration and now have a 
small number of inhabitants. Considering the age structure of people living in these areas, there is very high risk 
of them becoming abandoned in the near future. The number of persons migrating from rural to urban areas 
increased  during  2010–2019,  from  1.34  in  2014  to  1.74  thousand  persons  in  2019,  confirming  the  threat  of 
intensified depopulation (Table 22). 

92 

 
 
 
 
 
Table 22. Migration statistics (2010–2019, thousand persons) 

Statistics 

2014 

2015 

2016 

2017 

2018 

2019 

Total population (thousand persons) 

2 069.0 

2 071.0 

2 072.0 

2 074.5 

2 076.2 

2 076.2 

Number of population migrated out of the country  

0.84 

Number of population migrated from rural to urban areas  1.34 

Number of population migrated from urban to rural areas  0.91 

Net internal migration 

0.43 

1.02 

1.40 

0.99 

0.41 

0.63 

1.60 

1.03 

0.57 

0.42 

1.76 

1.04 

0.72 

0.38 

1.67 

0.92 

0.75 

0.80 

1.74 

0.96 

0.78 

Source: MK StatDatabase (2020), own calculations. 

Therefore, rural  employment is  very important  and plays a  significant  role in keeping the population in rural 
areas. During 2017–2019, most people working in agriculture were between 25 and 65 years of age, with a very 
small number of those employed younger than 25 years. This indicates that young people migrate to urban areas, 
or abroad, hence the need for support for younger people to encourage them to stay in rural areas by enabling 
different on-farm and off-farm job opportunities. As unemployment among the younger population is highest in 
the rural areas, it poses a risk to the success of rural development and increased the risk of the depopulation of 
the  rural  areas.  A  seasonal  labour  force  is  also  typical  for  the  sector,  and  this  contributes  to  decreasing  the 
poverty  and  unemployment  rate;  however,  the  availability  of  seasonal  labour,  cost  and  the  qualification  of 
individuals are becoming increasing challenges. In agriculture, the average farm holder is around 58 years of age. 

Around  50 %  of  the  total  population  in  rural  areas  is  active,  and  male  labour  is  dominant  in  this  population, 
making  up  70 %.  Higher  employment  rates  are  seen  among  the  rural  male  population  than  among  the  rural 
female population. The unemployment rate fell from 22.2 % in 2017 to 16.7 % in 2019 for the male population, 
while it remained almost unchanged for the female population at around 21 %. During the last 3 years of the 
period analysed, in terms of the active population in both the country as a whole and rural areas, the dominant 
age group was 35 to 65 years (Table 23). 

Table 23. Active and non-active labour population by age (2017–2019) 

Population 
(thousand persons) 

statistics 

Total country 

Rural areas 

of 

Proportion 
rural 
population  in  total  country 
population (%) 

2017 

2018 

2019 

2017 

2018 

2019 

2017 

2018 

2019 

Total  combined  active  and 
non-active population 

1 451 

1 446 

1 441 

658 

686 

648 

<34 years 

35–65 years 

Employed population 

<34 years 

35–65 years 

Unemployed population 

<34 years 

35–65 years 

Non-active population 

<34 years 

35–65 years 

Source: MK StatDatabase (2020). 

589 

862 

733 

231 

503 

213 

114 

99 

504 

244 

260 

579 

867 

748 

232 

516 

198 

107 

91 

500 

240 

260 

569 

871 

788 

249 

540 

166 

86 

80 

486 

235 

251 

281 

377 

316 

107 

209 

90 

53 

37 

252 

121 

131 

288 

397 

340 

112 

228 

94 

55 

38 

252 

120 

131 

265 

383 

341 

112 

229 

78 

42 

36 

229 

110 

118 

45 

48 

44 

43 

46 

42 

42 

47 

37 

50 

50 

50 

47 

50 

46 

45 

48 

44 

47 

52 

42 

50 

50 

50 

45 

46 

44 

43 

45 

42 

47 

49 

45 

47 

47 

47 

Poverty  remains  one  of  the  most  severe  problems  in  the  country.  Considering  the  gradual  decrease  in 
unemployment, the poverty rate (the threshold for which is 60 % of median equalised income) decreased from 
27 % in 2010 to 21.9 % in 2019. Consequently, the inequality income distribution has also decreased, with lowest 
Gini coefficient of 31.9 % in 2019 (40.9 % in 2010). Nevertheless, these indicators are still very high and imply 
that there is a significant portion of the population living in poverty in the country. 

93 

 
6.4.  National policy framework 

The law on agriculture and rural development (Official Gazette 49/2010 and its amendments) is the main legal 
framework determining the strategic orientation of agricultural and rural development policy in the country and 
its implementation. Owing to the wide spectrum of diverse and specific issues concerning agriculture and rural 
development in the country, there are more than 30 other laws and by-laws regulating different matters. 

The  strategic  orientation  is  also  postulated  in  the  most  recent  strategic  document,  namely  the  national 
agricultural and rural development  strategy (NARDS) for  2014–2020, which defines the policy’s priorities and 
specific  objectives  (Table 24).  The  policy’s  primary  focus  is  increasing  the  competitiveness  of  the  agricultural 
sector  and  agri-food  industry,  the  development  of  rural  areas  and  the  sustainable  management  of  natural 
resources. The improvement  of the economic position of agricultural entities is planned by restructuring and 
modernising the sector, improving food quality and safety and supporting the organisation of markets and agri-
food chains. Social and structural issues, such as the prevalence of small farms, demographic and educational 
aspects, and the lack of infrastructure, which are particularly present in rural areas, are addressed to improve 
living conditions and economic activities in rural areas. The environmental impact that intensive agriculture has 
on  water,  soil,  biodiversity,  etc.,  is  considered  through  the  sustainable  management  of  natural  resources. 
Continuous access to knowledge and investment in human capital in agriculture is a cross-cutting issue that can 
support the meeting of the other specific objectives. 

Table 24. Strategic priorities and specific objectives in the NARDS for 2014–2020 

Source: Authors’ interpretations and visualisation. 

In addition to this strategic document, there is IPARD II, whose objectives correspond to the strategic and specific 
objectives of the NARDS for 2014–2020. The objectives of IPARD II are addressed through 11 measures, but the 
implementation began with three accredited measures: (i) investments in physical assets of agricultural holdings 
(M1),  (ii)  investments  in  physical  assets  concerning  the  processing  and  marketing  of  agriculture  and  fishery 
products (M3) and (iii) farm diversification and business development (M7). Most investments for the first two 
measures  are  related  to  the  purchasing  of  machinery  and  equipment  for  specialised  production  and 
manufacturing activities. For the third measure, construction and reconstruction activities dominate, as well as 
improvements  to  applicants’  existing  infrastructure  (IPARD  Managing  Authority,  2019).  In  addition,  technical 
assistance (M9) is a horizontal measure that supports the successful implementation of the entire programme. 
Investment in rural public infrastructure (M6) is a measure that is currently in the process of accreditation, and 
the remaining measures are planned to be introduced at a later stage (their implementation has been postponed 
because of, according to the programme rationale, the need for additional preparation and capacity building). 

As the 7-year programming period of the NARDS for 2014–2020 is ending, the preparation of a new strategy is 
under  way.  Several  questions  are  during  the  preparation  of  the  new  NARDS  for  2021–2027:  Will  it  be  a 
continuation of the NARDS for 2014–2020? Will it be based on a situation analysis and an impact analysis of the 
previous  NARDS?  Will  it  be  in  line  with  the  new  CAP  priorities?  The  strategical  planning  for  the  NARDS  is 
undertaken by the Ministry of Agriculture, Forestry and Water Economy (MAFWE), as the responsible authority 
for  planning,  monitoring  and  evaluation  of  the  agricultural  and  rural  development  policy  measures  and 

94 

Priorities Increasing the competitiveness of the ag. sector and agri-food industry Development of rural areas Sustainable management of natural resources Specific Objectives Restructuring and modernization of the agri-food sector   Organization of markets, food chain and improvement of the quality of ag. products   Completing the functionality of the food safety system    Improving living conditions and economic activities in rural areas     Sustainable management of natural resources Continuous access to knowledge and investment in human capital in agriculture   
 
instruments, whereas the AFSARD is responsible for the implementation and control of the agricultural policy 
measures.  Nevertheless,  there  are  some  cross-cutting  issues  across  other  institutions,  which  need  to  be 
considered in the strategical planning for the next long-term programming period. 

The  operational  framework  is  defined  in  the  national  programme  for  agriculture  and  rural  development  for 
2018–2022 and in the annual support programmes for agriculture, for rural development and for fisheries and 
aquaculture. What is evident in the reference period (2017–2019), which has also been addressed in previous 
studies  (Dimitrievski  et  al.,  2017),  is  the  continuous  practice  of  issuing  frequent  amendments  to  the  annual 
programmes (a dozen per year), including to introduce a new measure(s), change set deadlines, alter the support 
amounts,  or  change  the  criteria  or  the  beneficiaries’  eligibility.  Such  frequent  operational  revisions  cause 
uncertainty in terms of the relevance of the strategic planning, the consistency and the focus of the policy, that 
is, does it aim to support farmers to merely help them survive or to grow, is it used to remedy other societal 
issues, and does the pressure from certain stakeholder groups interfere with the realisation of the programme? 
These questions stem not just from the current analysis covering the last few years, but also from observations 
of the sectoral policy during the whole period since the country’s independence. 

6.5.  Measures and budgetary support for agriculture and rural development 

The  budgetary  support  for  agriculture  and  rural  development  can  be  analysed  from  two  perspectives:  the 
programmed support (measures and funding) and the actual realisation (budgetary transfers). 

Programmed budgetary support 

The programmed measures are an illustration of the policy priorities set. The direct payments planned and the 
rural development scheme, as a list of measures with specific requirements, reflect the design of the agricultural 
and rural development policy. The programmed budgetary transfers to agriculture still mostly consist of direct 
producer support measures. Among the new policy measures in the direct payments scheme introduced in 2017 
(Table 25),  some  were  introduced  with  the  intention  of  becoming  regular  measures,  whereas  others  were 
applied as ad hoc, one-time measures. 

The programme for financial support of rural development follows the structure of the APMC, which more or 
less follows the EU rural development policy system for 2007–2013 (Volk et al., 2014); thus, the structural and 
rural development measures are grouped into three main categories, namely those targeting (i) competitiveness, 
(ii) the environment and countryside and (iii) the rural economy and population. 

The  first  axis,  to  improve  the  competitiveness  of  the  agri-food  sector,  includes  both  on-farm  and  off-farm 
investment support. The main form of on-farm support focuses on the modernisation of agricultural holdings by 
supporting investments such as the purchasing of machinery, livestock heads and bee queens and bee swarms; 
establishing  new  plantations  or  setting  up  drip  irrigation  system;  and  the  construction  of  wells  and  other 
interventions of surface water (M121). Other on-farm support includes targeted aid for young farmers (up to 40 
years of age) for starting agricultural activity (M112). Off-farm support includes includes capital investments in 
infrastructure for development of agriculture, forestry and water economy, such as hydrological interventions, 
consolidation of and access to agricultural land and state-owned pastures (M124), and investments in marketing 
infrastructure (for the processing and marketing of agricultural products, M123). The marketing of agricultural 
products is also supported by two technical measures: (i) aid for the organisation of and participation at fairs and 
other promotional events for agricultural products (1.1) and (ii) aid for the marketing of agricultural primary and 
processed  products  (1.3).  Producer  groups,  such  as  cooperatives,  are  also  supported  through  a  measure  to 
establish and maintain such groups (M131). 

95 

 
Table 25. New measures in the direct payments scheme (2017–2020) 

Measure 

Description 

Payments per output (as EUR/kg or EUR/piece) 

Ad  hoc  additional  payments  for  cereals,  vegetables  and 
fruits 

For barley (2017), wheat (2018), tomatoes (2018), cabbage 
(2020),  peaches  (2017),  plums  (2018)  and  apples  (2018–
2019) 

Additional payments for rice shells 

For rice shells sold to registered buyers (2018–2019) 

Payments for wine grapes 

For wine grapes sold to registered processing plants (2018–
2019) 

Small farm grants 

For farms of 0.2–0.5 ha (and separately for 0.5–1 ha in 2019) 

Historical payments for small farmers 

Payments per area (as EUR/ha) or livestock (as EUR/head) 

For beneficiaries from the last 3 years based on their average 
grants  within  four  categories  (up  to  162.5,  325,  487.5  and 
650 euro/ha) (since 2020) 

Additional payments for orchards and vineyards 

For reconstructed orchards and vineyards and for those that 
changed their variety structure (2018–2020) 

Additional payments for sheep 

For lambs delivered to slaughterhouses (2019) 

Other payments (based on % increase) 

Additional payments for increased livestock capacities 

For  increased  herd  size,  flock  size  or  number  of  bee  hives 
(2017–2020) 

Note: Some of these measures were previously also programmed, namely for wine grapes (2010–2012) and rice shells (2012). The full list of 
measures  of  the  direct  payments  scheme  and  more  details  are  available  in  Table 8.1  of  the  agricultural  statistics  database  for  North 
Macedonia, 2020. 

Source: Authors’ elaboration based on the programme for financial support of agriculture, and the supporting regulation acts. 

The  second  axis,  to  provide  environmental  and  societal  benefits,  involves  two  measures:  aid  for  agricultural 
production  in  less-favoured  areas  (M211)  and  for  organic  farming  (M215),  which  is  paid  as  additional  direct 
payments based on current capacities (in terms of agricultural area and livestock heads). In addition, biodiversity 
is supported through a measure for establishing, monitoring and analysing indigenous agricultural plant species 
and livestock breeds and their mandatory genetic reserves (M214). 

The third axis, to support the rural economy and population, includes measures to improve rural infrastructure 
and  basic  services,  and  as  such  to  improve  the  quality  of  life  in  rural  areas  (M321),  for  village  renewal  and 
development  (M322) and for preserving and promoting traditional values in rural areas (M323). As an aid to 
preserve  sheep  breeding  as  a  traditional  rural  activity,  compensation  is  also  provided  for  the  costs  of 
maintenance  of  highland  pastures  and  meadows  (M213).  Investments  for  increasing  the  economic  value  of 
forests (M122) is a measure targeting the development of non-agricultural activities in rural areas. Building local 
capacities  is  also  an  important  element  for  developing  the  rural  economy  (the  LEADER  approach),  which  is 
undertaken  through  several  measures:  establishing  local  action  groups  (M412),  providing  support  for  the 
realisation of strategies for the local development of rural areas (M413), fostering local development in rural 
areas (M431) and supporting the establishment of and activities within the national rural network (provided as 
technical support since 2019). 

The  programme  also  includes  some  general  measures  for  supporting  research-based  development,  namely 
important cross-cutting measures relevant for all three rural development policy axes: (i) the implementation of 
innovative  practices  (M1.6),  as  a  way  to  increase  competitiveness;  (ii)  investments  for  establishing  applied 
research pilot trials (M1.7), as a measure to communicate new and improved ways of operating in rural areas; 
and (iii) the implementation of research, analyses, project proposals, studies and strategic documents (M1.5), 
which are needed for evidence-based policymaking. These kinds of measures were introduced in 2012 and 2013. 
Additional general support for agriculture is provided through the subsidised interest rate (M2), which is another 
support measure included in the programme. Measures for vocational training and advisory services have been 
programmed until 2019, but there have not been payments since 2014 (according to the APM dataset) and they 
have  been  removed  from  the  programme  in  2020  (Table 26).  Those  informative  and  educational  events  that 
relate to the programme implementation have received support, namely as technical support. 

96 

 
Other  recent  changes  in  the  annual  programmes  include  the  introduction  of  several  new  measures,  namely 
measures for the restructuring of agricultural holdings (M125), establishing local action groups (M412) and, most 
recently, in 2020, supporting agricultural production (M113) and active female members in agricultural holdings 
(Table 26). 

Table 26. Changes in rural development measures (2017–2020) 

Added measures 

Code 

Measure 

Removed measures 

Code  Measure 

M113 

Support for agricultural production (in 2020) 

M111 

Training and information (in 2019 and 2020) 

M115 

M125 

M412 

M431 

Support 
agricultural holdings (in 2020) 

for  active 

female  members 

in 

M114 

Advisory services (in 2020) 

Restructuring  of  agricultural  holdings  (in  2018 
and 2019) 

Establishing  local  action  groups  (in  2019  and 
2020) 

Fostering  local  development  in  rural  areas  (in 
2017 and 2018) 

M431 

Fostering  local  development  in  rural  areas  (in 
2019 and 2020) 

Source: Authors’ elaboration based on the programme for financial support of rural development, and the supporting regulation acts. 

The implementation of these direct payment and rural development measures is supported via technical support 
for the related costs (M1.8) and through the preparation and publishing of educational, informative, scientific, 
promotional and professional materials, publications and journals (M1.4). 

Budgetary transfers 

The realisation of programmed policy measures depends on many internal and external factors, primarily the 
institutional  capacity  to  respond  to  the  number  of  applications,  but  also  the  complexity  and  duration  of 
procedures. The complexity of procedures, combined with the frequent amendments and adjustments to the 
regulations, are a challenge for applicants, as they have little experience in, knowledge of or skills for managing 
this process (Kotevska et al., 2016). 

The APMC database lists the payments in the year of realisation, as a function of all previously addressed factors. 
The payments are presented as the total budgetary transfers to agriculture and separately for market and direct 
producer  support  measures,  structural  and  rural  development  measures,  and  other  measures  related  to 
agriculture. 

6.5.1.1. 

Total budgetary support for agriculture 

There has been an increase in total budgetary transfers from the national budget to agriculture, namely from 
EUR 135.21 million in 2017 to EUR 152.80 million in 2019. This increase is evident  in all three pillars, but was 
most  significant  in  structural  measures  (EUR 26.38 million  in  2019,  compared  with  EUR 19.80 million  and 
EUR 11.51 million in 2017 and 2018, respectively). A change in the structure of budgetary transfers was evident 
in 2018 and 2019. As in the past, budgetary support for agriculture mainly focuses on market and direct support 
measures, which accounted for 76 % of total support for agriculture in 2017 (similar to the average for 2010–
2016), 82 % in 2018 and 73 % in 2019. Among market and direct support measures, direct payments to producers 
were  most  dominant  (95 %  on  average).  Structural  and  rural  development  measures  were  the  second  most 
utilised support measure (15 % in 2017, 9 % in 2018 and 17 % in 2019), and other measures related to agriculture 
made  up  around  10 %  (EUR 13.10 million  in  2017,  EUR 12.73 million  in  2018  and  EUR 14.73 million  in  2019), 
which was slightly higher than the average for 2010–2016, namely 8 % (Figure 47). The goal of the NARDS for 
2014–2020 to allocate 30 % of the budget for the second pillar was met only in 2016, when EUR 31.18 million 
was allocated to this pillar. 

97 

 
 
 
 
 
Figure 47. Total budgetary support for agriculture (2010–2019) 

6.5.1.2. 

Market and direct producer support measures 

Source: MK APMC database (2020). 

Direct payments, mostly coupled, are the major form of support in this area (Figure 48). Direct payments per 
output (i.e. per unit of agricultural product) make up about 40 % and payments based on capacity (i.e. per area 
of  agricultural  land or  per head  of  livestock)  make  up  about  60 %.  These  payments  are  conditional on  cross-
compliance to ensure the application of good agricultural practices. Market measures were paid, in 2017, for the 
buyout of wine grapes and, in 2019, for the buyout of wheat and plums, whereas export subsidies are planned 
only as additional payments for organic production (when realised, they are categorised as support for organic 
production).  Input  subsidies  have  taken  up  only  a  small  amount  of  budgetary  transfers,  ranging  from 
EUR 0.73 million in 2017 and EUR 1.32 million in 2018 (about 1 %) to EUR 3.56 million in 2019 (3 %). This category 
was mostly used in 2019 for introducing a measure for subsidising the cost of fuel used for agricultural machinery 
(the ‘green fuel’ measure), but has also been used in the form of insurance subsidies throughout the years and 
for co-financing of bank guarantees in 2015. Compensation was also provided to producers for damages caused 
by natural disasters (late frost, hail, drought and flood) that have affected agricultural production in the last few 
years. 

Crop commodities take up a larger proportion (around two thirds) of direct producer support measures, with 
tobacco  the  main  single  supported  commodity  (ranging  from  EUR 24.6 million  in  2017  to  EUR 29.2 million  in 
2019),  followed by vineyards (EUR 7.6 million in 2017, increasing to EUR 13 million in 2019) and arable  crops 
(EUR 11.9 million and EUR 10.3 million in 2017 and 2019, respectively). 

Figure 48. Market and direct producer support measures (2010–2019) 

Source: MK APMC database (2020). 

98 

 
 
 
 
Livestock commodities have taken up about one third of direct producer support in the last 3 years of the period 
analysed, with sheep and goats (per head) and milk (per output) as the main supported commodities (Figure 49). 
The sheep and goat subsector receives about EUR 14 million annually. Milk support is provided for all categories 
(cow’s,  sheep’s  and  goat’s  milk  at  EUR 11.3 million,  EUR 6.0 million  and  EUR 7.8 million  in  2017–2019, 
respectively),  whereas  about  EUR 7 million  is  injected  annually  into  the  cattle  sector  (milk  and  beef).  The 
decreasing number of livestock heads corresponds with these declining budgetary transfers to this subsector. 
Budgetary transfers are also provided for the pig (2 % of payments) and poultry subsectors (1 %), which are not 
supported as such in the CAP (Figure 50). There is a negligible amount of support dedicated to measures covering 
all commodities as a group or as mixed support (Figure 50). 

Figure 49. Direct producer support measures (2010–2019) 

Source: MK APMC database (2020). 

Figure 50. Direct producer support measures by subsector (2010–2019) 

6.5.1.3. 

Structural and rural development measures 

Source: MK APMC database (2020). 

Increasing competitiveness continues to be the major support mechanism for farmers (Figure 51), although the 
amount allocated has varied a lot in the last few years (EUR 16.6 million in 2016, EUR 7.3 million in 2017, 
EUR 8.6 million in 2018 and EUR 23.6 million in 2019). Support for the rural economy and population 
experienced a significant increase from 2014 to 2016, with the highest ever amount of budgetary transfers 
received in the latter year (EUR 13.2 million). In the years that followed, there was a significant decrease in the 
amount allocated for such projects (EUR 10.59 million in 2017, only EUR 0.14 million in 2018 and 
EUR 1.33 million in 2019). Agri-environmental support takes up only a small proportion of the second pillar 

99 

 
 
 
 
(with about EUR 2 million allocated per year). Within agri-environmental support, organic farming makes up 
the largest proportion (from 75 % in 2017 to 100 % in 2019). 

Source: MK APMC database (2020). 

Figure 51. Structural and rural development measures (2010–2019) 

Source: MK APMC database (2020). 

The  implementation of IPARD measures is also included in the structural and rural development  budget. The 
IPARD I programme, although intended for 2007–2013, had its last two calls in 2015 and payments were made 
in March 2017. The IPARD II (2014–2020) programme began with its first call in April 2017. Since then, there have 
been seven public calls. The first call covered three measures (measures 1, 3 and 7) and it was implemented in 
2018. The transfers to producers in 2018 amounted to EUR 1.34 million, that is, 11.6 % of the total budget for 
structural and rural development measures (according to the APMC). Of these, 45 % were dedicated to measure 
1 and 55 % to measure 2. The two calls in late 2018 covered measures 1 and 3, and they were implemented in 
2019, with EUR 11.92 million allocated (i.e. 26 % of the structural and rural development budget). These transfers 
were allocated between measures 1 and 3, with 59 % and  40 %, respectively. As in the case of IPARD I, farm 
diversification and business development (measure 7) was underused, being allocated only EUR 0.08 million in 
2019, that is, just 1 % of IPARD transfers for that year. Bearing in mind the plan for the allocation of EUR 6 million, 
EUR 10 million  and  EUR 14 million  for  2017,  2018  and  2019,  respectively,  the  budget  was  not  fully  utilised. 
However,  compared  with  the  implementation  of  IPARD I,  it  is  evident  that  there  were  lessons  learnt,  as  the 
implementation rate substantially increased, especially in 2019. 

The  proportion  of  total  IPARD II  transfers  for  structural  and  rural  development  increased  substantially  from 
11.6 % in 2018 to 45.2 % in 2019. However, this did not lead to a decrease in the national expenditure on rural 
in  2018  to 
development  policy;  on  the  contrary,  national  funds 
EUR 14.46 million in 2019. 

increased  from  EUR 10.17 million 

6.5.1.4. 

Other measures related to agriculture 

Budgetary  transfers  for  general  support  for  agriculture  (Figure 52)  reached  their  highest  level  in  2019 
(EUR 14.7 million) (34). 

The largest proportion (on average 77 % in 2017 and 2018) of such transfers were allocated to veterinary and 
food  quality  control  (as  the  budget  of  the  Food  and  Veterinary  Agency).  The  budget  for  expert  services  for 
research and development and vocational training, including the budget for the National Extension Agency, made 
up a much smaller proportion (12 % on average in 2018 and 2019) and decreased compared with the previous 
periods, namely 2010–2015 (15 %), and 2016 (28 %). Transfers for other general support measures were mainly 
designated for the budget of the National Hydrometeorological Service and for the organisation and realisation 
of various events and fairs, that is, EUR 1.42 million (11 %) in 2017 and 2018, compared with 14.5 % in 2010–
2015. 

(34)   Since the final budget for 2019 has not to date been published, the budgetary support of some institutions related to agriculture (the 
National  Extension  Agency,  the  Food  and  Veterinary  Agency,  the  National  Hydrometeorological  Service,  etc.)  are  included  as  the 
amount planned in the last budget rebalance in October 2019. 

100 

 
 
                                           
Figure 52. Other measures related to agriculture (2010–2019) 

6.6. 

EU approximation process 

Source: MK APMC database (2020). 

The  accession  negotiations  with  North  Macedonia  opened  in  March  2020,  pending  a  revised  enlargement 
methodology for enhancing the progress for the candidate countries. So far, the screening process is under way, 
but no chapters have been opened, as no exact date to start the negotiations has been set. It is still not fully 
certain how the new enlargement methodology will function and how it will affect the chapters connected to 
agriculture and rural development within the pre-accession negotiation framework. It is certain, though, that the 
future agricultural policy of North Macedonia will need to be amended in line with the changes to EU policy. 
Succeeding  the  CAP  for  2013–2020,  which  introduced  more  equitable  and  greener  direct  payments  and 
strengthened measures for rural development, the new CAP for 2021–2027 is intended to be additionally flexible 
and  hence  more  effective.  Member  States  will  have  single  national  strategic  plans  with  quantitative  targets 
covering both policy pillars. The proposal for the new CAP for 2021–2027 gives precedence to the environment 
and climate action issues, with direct payments to be closely linked to compliance with stricter environmental 
and climate protection requirements. Knowledge, advisory infrastructure and innovations  are also high on the 
priority list. The new 7-year strategic programme to be defined in the NARDS for 2021–2027 will have to consider 
these changes in its priorities and objectives, and hence programme appropriate measures that will address not 
only the production side of the sector, but also the wider economic, social and environmental context. 

The last EU approximation report found the country to be moderately prepared in the area of agriculture and 
rural development. The country’s legal framework is mostly aligned with the acquis, although there is a need for 
further policy alignment, including decoupling direct payments, and a stronger application of cross-compliance 
rules is recommended (European Commission, 2019). The chapter on food safety, veterinary and phytosanitary 
policy was evaluated as the strongest, with the country found to have a good level of preparation in terms of this 
chapter. 

With the sector development strategies (the NARDS for 2007–2013 and the subsequent NARDS for 2014–2020), 
North Macedonia has adopted priorities that, in principle, follow the EU CAP priorities. Nevertheless, differences 
remain between the national budget measures applied (direct producer support, in particular) in the country and 
the  EU  CAP.  A  significant  proportion  of  the  direct  support  is  still  oriented  towards  production  with  coupled 
payments, which contrasts with the EU policy approach of decoupled payments and greening with strict cross-
compliance requirements as the core mechanism of market-based support. 

The introduction of CMO, as part of the first pillar, was addressed more intensely in 2017–2019 than in previous 
periods. The legal framework on quality and marketing standards for agricultural products largely already exists, 
but some updates are needed and many provisions still need to be implemented. Still lacking is an appropriate 
framework  for  implementing  some  of  the  market  intervention  measures,  measures  to  improve  producer 
organisation  functioning,  measures  to  encourage  the  consumption  of  fresh  fruits,  vegetables,  milk  and  dairy 
products  (similar  to  school  schemes),  measures  to  enforce  contractual  relations,  etc.  The  agricultural  market 
information system within the MAFWE needs to be continuously upgraded, maintained and updated. 

101 

 
 
The rural development component conceptually reflects the current EU policy to a large extent. Nevertheless, 
the proportion of the budget allocated to structural and rural development measures needs to increase (towards 
the set goal of 30 %), so that they can have a more sustainable impact on the rural economy. A recent input–
output analysis, based on AFSARD and FADN  data (World Bank, 2019),  demonstrates that the economy-wide 
effects  of  rural  development  measures  are  greater  than  those  of  direct  payments,  when  improvements  in 
productive capacity and structural impacts are taken into account. Therefore, the reallocation of some funds 
from the first to the second pillar would enable better fulfilment of the rural development programme objectives, 
create  better  job  opportunities  in  rural  areas  and  target  young  people  and  women,  ensuring  generational 
transfer.  To enable business  development  and equal opportunities, support  is provided to young farmers for 
start-ups  and,  in  2020,  a  new  measure  was  introduced  for  supporting  active  female  members  in  agricultural 
holding (i.e. small grants for rural women up to EUR 3 000 – that is, M115 in the national rural development 
programme). 

Besides national funds, development is also supported by the current IPARD II programme, which, although it 
refers to 2014–2020, only started with its first call in 2017. The accreditation and implementation of measures is 
a long process that requires adequate human capacities, which must eventually be able to manage the process 
in line with the EU rules upon accession. Therefore, besides the specific measures and sector beneficiaries, one 
of  the  key  IPARD  contributions  is  the  development  of  the  institutional  infrastructure,  competence  and 
administrative capacities in the country, which is an important prerequisite for fulfilment of the EU accession 
requirements. Although the number of measures within the programme for 2017–2019 was initially planned to 
be increased, only three measures, and a fourth horizontal measure of technical assistance, are open for calls in 
the programme. The improvement of rural infrastructure is at an advanced stage, but is still not accredited. The 
agri-environment, climate and organic farming measure (M2.1) is planned to be introduced conditional on the 
preparation of an agri-ecological programme, ready paying agency procedures, certain legal interventions, an 
established system of sanctions, calculations for the amounts to be given to farmers, etc. The implementation of 
local development strategies (the LEADER approach (M3.3)) and advisory services (M4.3) is next in line, pending 
additional preparation and capacity building. 

The  lessons  learnt  from  IPARD I  have  contributed  to  gradual  improvements  to  and  higher  absorption  of  the 
IPARD II  funds.  The  main  lessons  learnt  are  as  follows:  there  is  a  need  to  simplify  some  procedures  and 
administration for applicants (they need to be made more easily understandable and approachable), for a faster 
resolution of the calls, for more visible communication of the programme to the potential applicants and for 
more transparent functioning of the IPARD committee. 

Given the large number of farmers in the country, the complex array of measures and criteria, the frequent short-
term alterations to the measures and the introduction of new ad hoc or regular measures, it is a necessary to 
have strong management and control systems. The development of the IACS, the farm register and the LPIS is 
ongoing, but, owing to insufficient resources to maintain and operate the system, these systems are still lacking 
in  terms  of  data  quality  and  relevance  (European  Commission  2019).  The  capacity  of  the  AFSARD  requires 
continuous strengthening to ensure that an increasing volume of national and IPARD measures are implemented. 
Although there has been some increase in staff in the AFSARD, fluctuations in employee numbers are still an 
issue and the agency’s capacity to absorb funds, especially with regard to IPARD II, is insufficient. 

The FADN  survey is regularly undertaken and was considerably improved in terms of procedures, data  entry, 
processing  and  controls  in  2018–2019,  ensuring  that  it  is  more  in  line  with  the  current  EU  requirements. 
However, to keep the system running, local human resources, both at the field data collection and entry level 
(National  Extension  Agency  advisors)  and  at  the  management  level  (MAFWE  staff),  have  to  be  continuously 
trained and developed. The use of the FADN data for policymaking purposes, in research and, last but not least, 
as feedback to farmers needs to be enhanced. 

6.7. 

Conclusions and recommendations 

Although the agricultural policy and its institutional framework should reflect the development of the agricultural 
sector, in practice the opposite is true. The policy priorities and goals are defined in the strategic documents and 
there are a number of laws, by-laws, programmes and measures to regulate and support the sector. However, a 
number  of  sectoral  issues  still  persist,  such  as  no  important  structural  changes  being  undertaken,  low 
productivity, and poor horizontal and vertical integration. 

As no important structural changes have been observed over the period analysed, the large number of farms 
(over half of which are very small farms) remain the core characteristic of North Macedonia’s agriculture. The 

102 

 
insufficient use of production capacities persists as a problem, resulting in persistent low productivity levels. The 
lack of more advanced investments, limited own finances and insufficient entrepreneurship skills emphasise the 
need for effective knowledge transfer and the encouragement of innovation. Horizontal and vertical integration 
is still poor. The cooperation between farmers, which is especially important given the generally small farm size 
and low individual market and bargaining power, is still lacking. Efforts have been made to support agricultural 
cooperatives, but their functioning and sustainability still remains a challenge. 

In  recent  years,  the  statistics  show  decreasing  livestock  numbers.  If  this  trend  persists,  it  could  affect  the 
subsector’s balance and existing value chains. In crop production, an increasing orientation towards less labour-
intensive crops has been observed, mainly owing to the decreased availability of labour and working capital. The 
existing  direct  payments  scheme  in  some  cases  drives  farmers  to  switch  to  less  labour-  and  capital-intensive 
farming enterprises. Organic production is increasing in terms of capacity and number of farmers. Nevertheless, 
it is still marginal, constituting less than 1 % of the total area of agricultural production and lagging far behind 
the total livestock fund. 

Labour  in  agriculture  and  rural  areas  is  becoming  one  of  the  key  constraints  in  terms  of  availability  and 
qualifications. The average farmer age, gender inequality and rural–urban and out-of-country migration further 
exacerbate  this  issue.  The  development  of  rural  areas,  as  vital  factor  in  economic,  social  and  environmental 
viability, has failed to gain the necessary attention. Rural communities are still faced with a lack of basic services, 
infrastructure and employment opportunities, affecting the quality of life and resilience of the rural population. 

Most of the issues in the sector arise from policy planning gaps and certain implementation challenges that need 
to be considered when planning the next policy cycle. The following are some of the key recommendations. 

Coupled direct payments are still an important part of the budget, which is not in line with the EU principles. To 
make farmers more responsive to the market, further decoupling of measures is expected, towards full alignment 
with the EU CAP. However, this should be done with caution, taking into consideration  the possible negative 
effects on the production structure and the experience from other countries in which  shifting to less labour-
intensive agricultural production occurred. Income support needs to be linked more intensely with protecting 
the  environment,  plant  and  animal  health,  and  welfare,  contributing  to  sustainable  agriculture  and  rural 
development. 

Furthermore, reallocating funds from direct support funds to structural and rural development funds, and even 
more  so  to  important  general  support  services  (such  as  advisory  services,  research,  knowledge  transfer  and 
measures for improving sector competitiveness), would improve farm efficiency and ensure more productive use 
of the limited public resources. 

There  is  a  large  number  of  measures  with  complex  procedures.  Their  frequent  changes,  especially  in  annual 
programming, are also a burden for less educated farmers, as this makes it hard for them to follow, understand 
and  meet  the  requirements.  Policy  needs  to  be  tailored  to  the  population  it  targets,  and  should  follow  the 
strategic goals and priorities set by policymakers. 

A general remark is that evidence-based policy is only partially ensured, with modest use of analytical tools in 
policy  development.  The  process  of  turning  data  into  meaningful  objective  information  that  can  be  used  for 
making informed policy decisions, and later transparent policy monitoring, evaluation and impact assessments, 
is still not a default applied mechanism. The lack of a system for monitoring, evaluation and impact assessment, 
and the lack of human resources with the appropriate knowledge of methods and tools, added to the persistent 
issue of the lack of data quality, availability and accessibility, remain major obstacles. 

There are many changes and challenges ahead, and these need to be taken into consideration in the new national 
strategical framework (the NARDS for 2021–2027), among which are the changes to the CAP and the new revised 
EU  accession  methodology.  The  COVID-19  crisis  also  raised  some  issues  regarding  the  functioning  of  the 
institutions in the agricultural sector and the economy in general. 

Regarding  the  legal  framework,  the  public  consultations  as  part  of  the  process  of  adopting  legislation  have 
improved  by  using  the  national  electronic  consultation  system.  Nevertheless,  proposed  legislation  should  be 
thoroughly discussed and explained to relevant  stakeholders, especially those directly targeted to be actively 
consulted  in  the  process,  and  their  opinions  should  be  taken  into  consideration  for  improving  the  legal 
documents. 

Continuous and consistent pursuing of the strategic goals and priorities set  should be a strong governmental 
commitment, as a prerequisite for successful implementation of the measures. In this context, cooperation and 

103 

 
coordination within and among the relevant institutions is of crucial importance. In addition, inter-ministerial 
consultations,  especially  on  cross-cutting  issues  such  as  environmental  issues,  sustainable  development,  and 
opportunities for young people and women, need to be properly integrated into the process. 

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(compiled under series of SWG projects), available at: http://app.seerural.org/agricultural-statistics/. 

APM  Database  –  North  Macedonia  (2020),  ‘Agricultural  Policy  Measures  Database  for  North  Macedonia’ 
(compiled under series of SWG projects) (unpublished data). 

Dimitrievski, D., & Kotevska, A. (2008). Challenges faced by the agro-food sector in the Republic of Macedonia 
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47-67. 

Dimitrievski,  D.,  Georgiev,  N.,  Simonovska,  A.,  Martinovska  Stojceska,  A.,  &  Kotevska,  A.  (2010).  Review  of 
agriculture and agricultural policy in FYR Macedonia. Proceeding: Studies on the Agricultural and Food Sector in 
Central and Eastern Europe, Agriculture in the Western Balkan Countries. Halle (Salle): IAMO, 145-164. 

Dimitrievski, D., Kotevska, A., Janeska Stamenkovska, I., Tuna, E., Nacka, M., Volk, T., ... & Mortensen, K. (2014). 
Agriculture  and  agricultural  policy  in  the  Former  Yugoslav  Republic  of  Macedonia.  Agricultural  policy  and 
European integration in Southeastern Europe, Budapest: Food and Agriculture Organization 121-134. 

Bajramović,  S.,  N.  Bogdanov,  J.  Butković,  D.  Dimitrievski,  E.  Erjavec,  G.  Gjeci,  E.  Gjokaj,  B.  Hoxha,  I.J. 
Stomenkovska, D. Konjević, A. Kotevska, A. Martinović, I. Miftari, M. Nacka, D. Ognjenović, M. Rednak, E. Tuna, 
T. Volk, E. Zhllima (authors); Volk, T., E. Erjavec, P. Ciaian and S. Gomez y Paloma (editors) (2016). Analysis of the 
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Agricultural Policy Developments in the Western Balkan Countries, European Commission, Joint Research Centre, 
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European  Commission  (2019),  North  Macedonia  2019  Report.  Accompanying  the  document  Communication 
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Macedonia, Skopje: Government of the Republic of North Macedonia. 

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(APM)  tool:  Evidence  from  Macedonia’,  Proceedings  of  AAEM  10th  International  conference  ‘Policy  and 
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IPARD Managing Authority (2019), Annual Report for Implementation of the IPARD Programme 2014–2020 (for 
the period until November 2019), Sixth Meeting of the Monitoring Committee of the IPARD Programme 2014–
2020. Skopje: Ministry of Agriculture, Forestry and Water Economy 

Rednak, M., and Volk, T. (2010), ‘Agricultural policy measures  template – A tool  for classifying and analysing 
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Germany, pp. 219–245. 

Rednak, M., Volk, T. and Erjavec, E. (2013), ‘A tool for uniform classification and analysis of budgetary support to 
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Volk,T.,M.Rednak,  E.Erjavec,  I.Rac,  E.Zhllima,  G.Gjeci,  S.Bajramović,  Ž.Vaško,  M.Kerolli-Mustafa,  E.Gjokaj, 
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(authors),  B.  Ilic,  D.  Pavloska  -Gjorgjieska,  P.  Ciaian  (editors).Agricultural  policy  developments  and  EU 
approximation  process  in  the  Western  Balkan  countries,  EUR  29475  EN,  Publications  Office  of  the  European 
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Southeastern European countries in comparison with the European Union, in Volk, T., Erjavec, E. and Mortensen, 
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7.  CASE STUDY: SERBIA 

Vlado Kovačević (35) 

7.1. 

Introduction 

Agriculture is an economically and politically important sector in Serbia. The agricultural sector in 2019 accounts 
for around of 11.7 % of GVA and employs 19.1 % of the total labour force (MAFWM, 2019b). Serbian agriculture 
is characterised by a consistent positive foreign trade balance, underutilised resources and production potentials, 
underdeveloped  agri-food  chains,  the  marginalisation  of  rural  areas,  etc.  A  limitation  in  the  research  on 
socioeconomic issues is the lack of information and an adequate methodology for monitoring at the state level. 
In previous decades, the agricultural policy in Serbia was quite inconsistent, characterised by changing political 
and economic aims, a satisfaction of farmers’ social needs and market disturbances. Currently, the budgetary 
support  for  agriculture  and  rural  development  is  around  5 %  of  the  national  budget,  with  direct  subsidies 
dominating. Serbia gained candidate status on 1 March 2012. As of December 2017, the IPARD II programme 
began in Serbia. 

This chapter analyses Serbian agriculture in terms of the existing policy and institutional framework, the state of 
the agricultural sector, the structure of budgetary support, recent trends, the sector’s output and foreign trade, 
the main developments in key subsectors and the basic characteristics of farm structure. Special attention is paid 
to  the  role  of  European  integration  in  the  context  of  agriculture  and  rural  development.  The  analysis  of  the 
agricultural  sector  is  based  on  the  agricultural  statistics  database (36)  and  the  APM  database (37),  as  well  as 
national statistics data  provided by the Statistical Office of the Republic of  Serbia (SORS). Data  on budgetary 
transfers  are  collected  from  the  Ministry  of  Agriculture,  Forestry  and  Water  Management  (MAFWM)  and 
classified according to the APMC template to enable comparison with other WB countries/territories and the EU 
CAP. The analysis covers 2010–2019, with particular focus on the situation and changes in recent years, namely 
from 2017 to 2019. 

7.2. 

State of the agri-food sector 

During the period reviewed, agriculture remained a sector that played a significant role in the national economy 
(Table 27). Agriculture is an important sector in the Serbian economy, although its contribution to GVA has been 
slowly decreasing, reaching 11.7 % in 2019. The agriculture sector employs 19.1 % of the Serbian workforce and 
has a consistent positive foreign trade balance. 

The  negative  effects  of  the  global  economic  crisis  were  noticeable,  affecting  several  of  the  main  economic 
indicators, while, in the middle of the period analysed, the effects of floods had a negative influence on some 
sectors, especially agriculture. The second half of the period was characterised by a steady positive trend in most 
indicators. 

One of the main structural issues in Serbia is unfavourable farm structures and low productivity. However, there 
are growing trends in the average wheat and maize yields, which provide a  strong export base in the cereals 
production sector. In addition, average milk yield also increased over the past decade; therefore, although there 
was a reduction in the number of dairy cows, the amount of milk produced remained unchanged (Table 27). 

The structure of farms regarding UAA size has improved slightly, as some small farms (up to 1 ha) have upgraded 
to a higher UAA size category. The majority of farms (about one third of all farms) utilise from 1 to 3 ha, but these 
farms represent only 10.3 % of UAA. In addition, 11 % of farms cultivate over 10 ha of UAA, covering 57.5 % of 
total UAA  (SORS, 2013). 

According to the 2018 farm structure survey data, (SORS, 2018), there are 1.93 million livestock units in Serbia, 
a decrease of 4 % compared with the 2012 census data. About 77 % of farms own some livestock. The average 
number of livestock units per farm is 4.4, indicating a predominance of small herds and a limited scope of the 
production (market oriented). The majority of farms (35.7 %) breed between 1 and 3 livestock units, while almost 
70 % of farms have up to 3 livestock units. Only 0.5 % of farms breed more than a quarter of the total number of 
livestock units in the country. 

(35)  Institute of Agricultural Economics, Belgrade, Serbia; vlado_k@iep.bg.ac.rs 
(36)  The agricultural statistics database was compiled for Serbia under the SWG Institute for Prospective Technological Studies (IPTS) projects 

(http://app.seerural.org/agricultural-statistics/). 

(37)  The agricultural policy measures database was compiled for Serbia under the SWG IPTS projects. 

106 

 
                                           
About 1 336 940 persons were engaged in agriculture in 2018 (7.4 % less than in 2012), of which 98.5 % is the 
family  labour  force.  The  total  number  of  annual  work  units  (AWUs)  was  645 733  in  2018,  of  which  91.6 % 
originated from the family labour force. The AWUs per holding was 1.14 in 2018, which was 11.4 % more than in 
2012,  while the AWUs per hectare of UAA and per livestock  unit stayed the same as in 2012 (0.19 and 0.33, 
respectively). 

Table 27. Serbian agriculture’s contribution to the economy and characteristics of the agricultural sector 
2012 

Characteristic 

2016 

2015 

2010 

2013 

2014 

2011 

2017 

2018 

2019 

% of GVA  

12.2  

13.3 

12.1 

13.2 

13.0 

12.6 

12.8 

11.7 

11.7 

: 

% of employment  

26.2  

25.2 

25.4 

25.4 

23.7 

23.4 

22.5 

21.0 

19.8 

19.1 

Agri-food exports (% of total 
exports)  

Agri-food 
total imports)  

imports 

(%  of 

Agri-food  export-to-import 
rate (%) 

23.0  

23.2 

24.1 

19.1 

20.8 

21.6 

21.8 

19.4 

17.5 

18.5 

6.6  

7.4 

8.3 

7.9 

8.0 

9.1 

7.8 

9.5 

7.8 

7.8 

207.7   185.8 

174.5 

172.1 

187.4 

175.0 

214.5 

158.2 

166.5 

173.3 

UAA (thousand hectares)  

3 521   3 528 

3 462 

3 495 

3 518 

3 480 

3 456 

3 438 

3 487 

3 482 

% of arable land in UAA  

75.4  

74.8 

74.0 

74.1 

74.1 

74.4 

75.2 

75.5 

74.1 

74.1 

crops 
%  of 
agricultural production  

in 

total 

70.5  

69.1 

64.5 

67.0 

66.9 

65.8 

71.1 

65.7 

67.6 

: 

Average wheat yield (t/ha)  

3.4  

4.2 

4.0 

4.3 

3.9 

4.1 

4.8 

4.1 

4.6 

4.4 

Average  milk  yield  (t/dairy 
cow)  

:, not available. 

Source: SORS 2020. 

2.9  

3.0 

3.0 

3.3 

3.4 

3.6 

3.6 

3.6 

3.6 

3.6 

The age distribution of farm holders is not favourable, as the average age of farm holders is 61 years (2 years 
older than in 2012), with 42.8 % of holders over 65 years of age. Only 3.1 % of holders are younger than 35 years 
and 7.1 % of farm holders are under 40 years of age. The gender structure is also not favourable, as females make 
up only 15.3 % of all farm holders. The educational structure shows that the majority of farm holders carry out 
their business based on experience gained through practice (48.6 %), while 45.2 % have a high school education 
and 6 % have a university degree (SORS, 2013). 

The average standard output per holding has been increasing significantly since the 2012census data – according 
to  farm  structure  survey  data,  the  average  standard  output  in  2018  was  EUR 9 457  (EUR 5 918  in  2012).  The 
distribution of standard output has also improved, with 27.7 % of holdings having a standard output of less than 
EUR 2 000 per holding (this was 45.9 % in 2012), while 23.5 % have a standard output between EUR 2 000 and 
EUR 4 000,  similar  to  the  proportion  of  holdings  with  a  standard  output  between  EUR 4 000  and  EUR 8 000 
(23.1 %).  Vojvodina  kept  its  position  as  having  the  highest  values  regarding  average  standard  output  (SORS, 
2013). 

Agricultural  production  in  Serbia  is  based  largely  on  crop  production,  which  constitutes  about  two  thirds  of 
agricultural output. In 2018, crop production accounted for 67.6 % of agricultural output, while livestock output 
accounted  for  29.9 %.  Both  indicators  are  at  a  similar  level  to  5  years  previous.  However,  owing  to  the 
characteristics  of  crop  production  itself  (i.e.  the  seasonal  impact),  the  proportion  of  crop  production  in 
agricultural output has varied between 64.5 % and 71.1 % in the last decade (MAFWM, 2019b). 

The most significant contributions to Serbian agriculture in terms of resources, production potential and their 
growing trend can be considered the production of cereals, oilseeds, fruit and vegetables, beef and veal, and 
milk  and  dairy  products.  Serbia’s  organic  production  segment  has  seen  marked  growth,  both  in  plant  and  in 
livestock production. The area under organic production reached about 9 000 ha in 2018, five times more than 
in 2012. More than one third of the area is covered by orchards, and other common organic crops include wheat 
and oilseeds (MAFWM, 2019b). 

Agriculture’s contribution to GVA has shown a steady trend that has followed the increase in total output and 
input consumption in the period analysed. Subsidies on products represent, on average, 8 % of total output at 

107 

 
producers’ prices, but the absolute level of subsidies has been growing, reaching a maximum of EUR 491 million 
in 2019. Feeding stuffs make up the most significant proportion of total intermediate consumption (34.6 % on 
average), ranging between EUR 960 million and EUR 1.1 billion in 2010–2018. Energy makes up 12.7 % of total 
intermediate  consumption,  while  other  goods  and  services  make  up  about  13 %.  On  the  other  hand,  plant 
protection  products,  veterinary  expenses  and  agricultural  services  contribute  only  3.6–5.5 %  of  total 
intermediate consumption (MAFWM, 2019a). 

After significantly lower levels of price indices in 2010 and 2011 (compared with 2015), nominal price indices 
varied within the limits of ±10 % in the period that followed. In 2019, total agriculture price indices were 2.4 % 
higher than in 2015 and 2.7 % higher than in 2018 (MAFWM, 2019a). 

The agriculture and food industry remains one of the few sectors in the Serbian economy with a positive foreign 
trade balance. The foreign trade of agricultural and food products in 2019 accounted for EUR 5.11 billion. The 
foreign trade in 2019 was 11.8 % higher than in 2018 and 21.5 % higher than the 5-year average. Both exports 
and  imports  of  agricultural  and  food  products  continue  to  grow  –  in  2019,  exports  reached  a  value  of 
EUR 3.24 billion (13.7 % higher than in 2018) and imports amounted to EUR 1.86 billion (8.6 % higher than in 
2018).  This  relationship  between  exports  and  imports  resulted  in  a  positive  trade  balance  at  the  level  of 
EUR 1.38 billion, which was 21.2 % higher than in the previous year. The import coverage ratio of agricultural and 
food products in 2019 was 1.74 (MAFWM, 2019a). 

The structure of the foreign trade balance is not favourable; Serbia imports mainly high-value products, while 
exporting mainly raw agricultural products. Raw agricultural products traditionally dominate in the structure of 
exports and imports in terms of the level of product processing. In both segments (exports and imports), primary 
agricultural products were still dominant in 2019, making up 72 % and 62 %, respectively. Processed agricultural 
products account for slightly more than a quarter of the value of exports (27 %), while they account for a third 
of the imported value (33 %). Traditionally, the EU is the most significant export destination for agricultural and 
food products from Serbia, as almost half of the  export value (48.9 %) is delivered to the EU market.  Central 
European Free Trade Agreement (CEFTA) countries are the export destination for 28.5 % of exports, and 22.5 % 
of products were sold in other countries (MAFWM, 2019a). 

Most of imported agricultural and food products originate from EU countries, making up 65.3 % of the imported 
value. About  a  quarter of imports (25.2 %) were from other countries and 9.5 % were  from CEFTA countries. 
Among other countries, Russia is Serbia’s most significant trade partner, as one third of trade with EU and CEFTA 
countries represents trade with Russia. This trade is supported by the free trade agreement between the two 
countries and preferential access for their products (MAFWM, 2019a). 

7.3. 

Socioeconomic issues underlying rural areas 

One  of  the  most  important  limitations  in  research  of  rural  socioeconomic  issues  is  that  the  socioeconomic 
indicators (38)  in  Serbia  at  the  state  level  are  not  established  completely.  Predominantly  rural  regions  are 
represented by the two types of settlements: ‘urban’ and ‘other’. Serbia uses the simple OECD regional typology 
(at the local level, the population density criterion). This classification has proved in practice to be insufficient. A 
second  limitation  is  that  Serbia  has  not  prepared  a  typology  of  the  region  (a  classification  of  NUTS  level  3 
areas) (39) according to the urban–rural typology recommended by the Directorate-General for Agriculture and 
Rural Development (40). 

The lack of socioeconomic indicators is obvious. A number of indicators per type of region are missing. In more 
detail,  the  indicators  missing  in  this  segment  are  the  following:  population,  according  to  the  urban–rural 
typology;  age  structure,  according  to  the  urban–rural  typology  (predominantly  rural,  intermediate  and 
predominantly  urban  regions);  territory,  according  to  the  urban–rural  typology  (predominantly  rural, 
intermediate and predominantly urban regions); employment and unemployment rate, according to the degree 

(38)  The socioeconomic and other common context indicators are used as a framework for monitoring and evaluating the CAP and rural 

development policy in the EU countries. 

(39)  For the 2021 census (once the SORS has the available data on the spatial distribution of the population up to the level of the house 

number and has formed a network of population grids of 1 km2), the SORS is expected to classify the spatial units for the municipality 
level (LAU level 2), according to the degree of urbanisation in accordance with the degree of urbanisation (DEGURBA) classification, 
which will be the basis for the development of the typology of the region (NUTS level 3), according to urban–rural typology of the 
European Commission (predominantly urban regions, intermediate regions and predominantly rural regions). 

(40)  For  more  information,  see  Eurostat’s  degree  of  urbanisation  territorial  typologies  manual  (https://ec.europa.eu/eurostat/statistics-

explained/index.php?title=Territorial_typologies_manual_-_degree_of_urbanisation). 

108 

 
                                           
of urbanisation LAU level 2 spatial units (scarcely/intermediate/densely populated areas); and GDP per capita, 
according to the urban–rural typology (predominantly rural, intermediate and predominantly urban regions). 

In addition, the SORS does not monitor employment, total or by sector of activity, according to the concept of 
national accounts, which makes it impossible to calculate the derived indicator ‘Labour productivity, total and by 
sector: primary, secondary and tertiary sector’. The SORS collected data on the number of employees according 
to the concept of national accounts for 2015–2017, but these data are experimental and not for public use. It is 
necessary to continue further harmonising the SORS methodology with that of Eurostat, and to introduce new, 
currently missing, indicators by the SORS, especially in the segment of national accounts and economic accounts 
of agriculture. Additionally, it will be crucial to establish a classification of spatial units at the municipal level (LAU 
level 2) according to the degree of urbanisation methodology, and to apply the European Commission urban–
rural typology at the area level (NUTS level 3), as only a proper definition of rural areas can provide the basis for 
establishing relevant indicators for assessing the state of development of rural areas. 

According to the existing data, the rural population of Serbia is made up of 2.73 million people, making up about 
39 % of the total population. The number of inhabitants living in rural areas, and their proportion of the total 
population, has slightly decreased, reaching its lowest level at the end of 2018 (MAFWM, 2019a). This negative 
trend is caused by migration into urban areas and follows a general trend in Europe. 

The total number of employees in the agricultural sector has also decreased, reaching 452 700 (15.6 % of total 
employment). With an average net monthly salary of EUR 402 (and an average gross monthly salary of EUR 555), 
employees in agriculture receive 14 % less than the national average net monthly salary. The active workforce 
rate of the total population was 54.6 % in 2019. The majority of this workforce are male (63 %), with a similar 
gender distribution also in the employment rate. The unemployment rate has seen a  downwards trend in the 
last decade, reaching its lowest level in 2019 at 10.4% (MAFWM, 2019a). The majority of unemployed people are 
women. 

Regarding the education of the labour force, the most dominant group are people with a high school education 
in all categories. About 57 % of employees have a high school education, while those with a higher education 
accounted for 26 %. Within the unemployed population, 62 % have a high school education (SORS, 2013). 

Concerning the structure of the labour force according to age, those between 34 and 65 years of age dominate 
in all categories, making up 68 % of the employed population and 52 % of the unemployed population (SORS, 
2013). 

7.4.  National policy framework 

In the last decade, there appreciable progress has been made in adopting legal and strategic documents that 
define  the  long-term  strategic  goals  of  Serbian  agriculture  and  the  pathway  for  the  implementation  of 
agricultural and rural development policies. The EU negotiating process itself had a significant influence on these 
activities, in particular after 2013. 

Currently,  agricultural  and  rural  development  policies  are  based  on  several  strategic  and  legal  documents, 
governing the implementation of agricultural and rural development support. Two basic legal acts establish the 
legal framework for the implementation of subsidies. First, the law on agriculture and rural development (Official 
Gazette of the Republic of Serbia Nos 41/09, 10/13 and 101/16) establishes the basic bodies, mechanisms and 
instruments  and  provides  the  environment  for  the  implementation,  monitoring  and  evaluation  of  policies. 
Second, the law on subsidies in agriculture and rural development  (Official  Gazette of the Republic of Serbia 
Nos 10/13, 142/14, 103/15 and 101/16) defines subsidies in agriculture and rural development (direct payments, 
rural  development  measures,  credit  support,  specific  subsidies  and  IPARD  measures),  the  manner  of 
implementation, beneficiaries, eligibility criteria, the requirements for exercising the right to subsidies and the 
minimum level of support per measure. 

The allocation of budgetary funds, allocated to the subsidies within the MAFWM’s budget, is carried out annually 
by the regulation on the allocation of subsidies in agriculture and rural development for a calendar year. This 
regulation defines allocated funds per type of subsidy and the maximum level of support per measure, which will 
be implemented in a calendar year. It is adopted by the government, within 30 days of the adoption of the budget 
of the Republic of Serbia for a calendar year. 

Several strategic and programme documents direct agriculture in the long and medium term. The main strategic 
document,  which  provides  a  strategic  framework  for  medium-term  programmes,  is  the  strategy  for  the 

109 

 
agriculture and rural development of the Republic of Serbia for 2014–2024. The strategy defines the strategic 
framework, vision and objectives, indicators, and measures and activities for achieving defined strategic goals in 
the 10-year period. The strategy takes into account the process of EU integration and the necessary activities for 
working towards Serbian membership in the EU. 

The  vision  of  the  development  of  agriculture  and  rural  areas  in  Serbia  reflects  the  projected  state  of  the 
agricultural sector. The vision is as follows: (i) agriculture in Serbia is a sector whose development is based on 
knowledge, modern technologies and standards that offer national and demanding foreign markets innovative 
products and provides producers with sustainable and stable income and (ii) natural resources, the environment 
and  the  cultural  heritage  of  rural  areas  are  managed  in  accordance  with  the  principles  of  sustainable 
development, in order to make rural areas attractive for young people to live and work in, as well as for other 
people living in rural areas. 

The  strategy  defines  five  strategic  goals:  (i)  a  growth  in  production  and  an  improvement  to  the  stability  of 
producers’ incomes, (ii) an increase in competitiveness while adapting to the demands of domestic and foreign 
markets  and  the  technical  and  technological  progress  of  the  agricultural  sector,  (iii)  achieving  sustainable 
resource management and environmental protection, (iv) an improvement in the quality of life in rural areas and 
poverty  reduction  and  (v)  achieving  effective  management  of  public  policies  and  the  improvement  of  the 
institutional framework for the development of agriculture and rural areas. 

Based on the strategy, two medium-term programmes have been adopted, containing detailed 3-year plans and 
dynamics for the implementation of the policy, as well as the main activities for the harmonisation of the national 
agricultural and rural development policies with the appropriate CAP schemes in the pre-accession period. 

The  national  agriculture  programme  for  2018–2020  provides  a  strategic  medium-term  framework  for  the 
implementation of direct payments, credit support and specific subsidies in 2018–2020. The national agriculture 
programme  also  defines  the  dynamics  of  the  transposition  of  these  schemes  towards  the  CAP,  as  well  as  an 
estimated budget and indicators, which are the basis for monitoring, evaluation and reporting results. 

The national programme for agriculture for the period 2018 - 2020 defines national rural development measures 
only. The document completing the rural development policy in Serbia is the IPARD II programme, which is the 
basis for the implementation of IPARD measures in 2014–2020, co-financed by the European funds. The IPARD II 
programme  for  2014–2020  aims  to  strengthen  the  competitiveness  of  the  production and  processing  sector, 
which will help in the gradual adaptation to the EU standards in the areas of hygiene, food safety, veterinary and 
environmental protection, and the diversification of the rural economy. IPARD II offers investment support at a 
value of about EUR 225 million, of which EUR 175 million is EU contributions. There are six IPARD II programme 
measures: (i) investments in physical assets of agricultural holdings (44 % of the total allocation; measure 1); (ii) 
investments  in  physical  assets  for  the  processing  and  marketing  of  agricultural  and  fishery  products  (38 %; 
measure  3);  (iii)  agri-environmental-climate  measures  and  organic  production  (4 %;  measure  4);  (iv)  the 
implementation  of  local  rural  development  strategies  –  the  LEADER  approach  (3 %;  measure  5);  (v)  the 
diversification of agricultural holdings and business development (9 %; measure 7); and (vi) technical assistance 
(2 %; measure 9). 

The  implementation  of  the  IPARD II  programme  in  Serbia  began  at  the  end  of  2017,  while  the  official 
accreditation  came  into  force  on  12 June  2018  with  the  signing  of  the  financing  agreement  between  the 
Government  of  the  Republic  of  Serbia  and  the  European  Commission.  Currently,  the  IPARD II  programme  is 
implemented through measures 1, 3, 7 and 9, and a procedural framework for the accreditation of measures 4 
and 5 is being prepared. 

The IPARD funds used are lower than planned (for measure 1, EUR 6.103 million was used, and this made up the 
total funds used in the IPARD II programme in 2017–2019, as there were no disbursements for measure 3). The 
most important factors that influenced the deviation of the implementation of the IPARD II programme from the 
plan were (i) a delay in the accreditation of all planned measures, (ii) a longer application-processing period at 
all stages, (iii) uncertainty among applicants regarding the exercising of their rights to IPARD II assets, (iv) a lack 
of  opportunities  to  use  support  in  the  financing  of  IPARD  projects,  (v)  administrative  obstacles  for  the 
involvement of more beneficiaries, such as the inability to initiate start-up investments (beneficiaries of both 
measures  1  and  3  must  prove,  when  applying,  that  they  are  already  engaged  in  the  sector),  facilities  on  the 
Directorate-General for Health and Food Safety list not applying, etc., (vi) the submission procedure in terms of 
the need for three offers and (vii) insufficient information about beneficiaries (which the analysis showed to be 
the most common reason for rejection). 

110 

 
In  a  broader  sense,  the  agricultural  and  rural  development  policy  is  directed  partially  by  certain  national 
documents, prepared as a part of the negotiating process, with the goal to provide a plan for the harmonisation 
of national legislative with the acquis. The national programme for adoption of the acquis is a detailed, multi-
annual plan for harmonisation of the domestic legislation with the EU legislation. It connects European legislation 
and the domestic legal system, in order to monitor the dynamics, scope and quality of the harmonisation at all 
times. In the national programme for adoption of the acquis, the EU acquis is presented in accordance with the 
competence of state bodies as the leaders of negotiations in the negotiation chapters, which enables regular 
planning  and  monitoring  of  their  legislative  activities.  The  action  plan  for  the  harmonisation,  adoption  and 
implementation of the EU acquis in the field of agriculture and rural development has been prepared as a part 
of fulfilling the opening benchmarks for Chapter 11. The action plan provides the manner and dynamics through 
which the national policies will be adjusted in line with the CAP policies. The action plan was adopted by the 
government and delivered to the European Commission at the end 2018. 

7.5.  Measures and budgetary support for agriculture and rural development 

Budgetary  support  for  Serbian  agriculture,  after  a  decline  in  2015,  experienced  a  resurgence  in  2016–2019 
(Figure 53).  The  highest  budget  support  was  achieved  in  2019  at  EUR 318 million.  The  budgetary  support  is 
characterised  predominantly  by  first  pillar  measures  (direct  support  mostly),  with  a  noticeable  increase  in 
structural and rural development measures in 2017–2019. 

Figure 53. Total budgetary support to agriculture (2010–2019) 

Source: RS APMC database (2020). 

Market  and  direct  support  measures  are  dominant  in  budgetary  support;  these  measures  reached  their 
maximum  in  2014  (EUR 279 million,  which  was  almost  90 %  of  total  support)  and  decreased  to  around 
EUR 240 million (i.e. 70 % of total support) in 2019. All direct payments to producers in the previous period were 
coupled direct payments (Figure 54). 

111 

 
Figure 54. Market and direct producers support measures (2010–2019) 

Source: RS APMC database (2020). 

After 2011, the market measures, which were based on export subsidies only, were abolished in accordance with 
the World Trade Organization (WTO) negotiating process, as this measure was not in line with the WTO trade 
policy. There has been a tendency towards decreasing input subsidies (excluding insurance premium subsidies) 
and  their  transformation  into  direct  payments  to  producers  (per  head/area),  directed  by  the  plan  for  the 
harmonisation  of  national  direct  payments  with  the  CAP.  Variable  input  subsidies  saw  a  decreasing  trend  in 
2010–2019.  At  the  beginning  of  the  period,  input  subsidies  contributed  about  70 %  to  total  support  for 
agriculture,  with  the  highest  level  being  EUR 135.1 million.  In  the  following  years,  variable  input  subsidies 
decreased, reaching EUR 5.1 million at the end of the period analysed. Subsidies for insurance premiums grew, 
in terms of both allocated funds and number of beneficiaries. 

The direct payments based on output (price support) had showed a strong upwards trend over the last decade, 
reaching a maximum of EUR 50 million in 2019, almost 14 times higher than in 2010. The only scheme for this 
type of subsidy is milk premiums, which is one of the long-lasting support measures in Serbian agricultural policy. 

Direct  payments  based  on  area/animal  have  increased  over  the  last  10  years  (Figure 55).  After  the 
implementation of the law on subsidies in agriculture and rural development, there was a significant increase in 
funding for this type of subsidy, with a maximum amount of EUR 166 million in 2019 (75 % of direct support). A 
drop in the funds level was seen in 2015–2017, caused by the rationalisation of the Serbian budget. 

Direct payments based on area are paid for sown arable land and were limited to a maximum of 20 ha per holding 
from 2015. Direct payments based on animals were introduced by the law on subsidies in agriculture and rural 
development in 2013, including subsidies for quality breeding animals, subsidies for cattle, pigs, lambs and kids 
fattening, subsidies for suckler cows, subsidies for cows for breeding calves for fattening, subsidies for beehives 
and subsidies for fish production. 

112 

 
Figure 55. Direct producer support measures (2010–2019) 

Source: RS APMC database (2020). 

Support for rural development experienced a downwards trend for most of the period analysed (2010–2016) and 
then saw a significant increase from 2017, achieving a maximum of EUR 62.2 million in 2019, namely 2.6 times 
higher amount than in 2010. One of the reasons for this increase could be the introduction of IPARD measures 
(and EU co-financing) and the release of funds for national rural development measures. The allocated fund for 
IPARD II is EUR 175 million from the EU and EUR 50 million from the national budget (41). Nevertheless, the IPARD 
funds  used  were  much  lower  than  those  planned  and  hence  the  actual  budgetary  contribution  is  still  small. 
Regardless  of  the  overall  level  of  funds  for  rural  development  throughout  the  whole  period,  most  of  the 
budgetary funds were intended to improve competitiveness, namely 92 % on average (Figure 56). 

Support  for  rural  development  in  terms  of  on-farm  investment  during  the  last  decade  has  been  increasing 
steadily. Furthermore, these funds make up the majority of the rural development funds, namely 57 % in 2010 
and  as  high  as  94 %  in  2016.  On-farm  investment  support  reached  its  maximum  value  in  2019,  namely 
EUR 55.8 million (90 % of rural development funds and 17.5 % of total support for agriculture). 

Support for the processing and marketing of agricultural products includes subsidies for improving the quality of 
wine and spirits, as well as for the procurement of equipment in the meat, milk, fruit, vegetables, grape, wine, 
spirits and beer production sectors. The current support level is 50 % of the investment value and, in areas with 
difficult working conditions, 65 % of the investment value. 

The agri-environment measures slightly increased over the period analysed, but are still at a low level. This type 
of support includes subsidies for the conservation of plant and animal genetic resources and subsidies for organic 
production.  The  IPARD II  agri-environmental  measure  is  in  the  accreditation  process.  Subsidies  for  organic 
production are calculated based on the amount of support in conventional production (direct payments based 
on area/animal) increased to 120 % in plant production and 40 % in livestock production, currently. 

(41)  For more information on IPARD II, see the IPARD programme for the Republic of Serbia for 2014-2020 and Official Gazette of the Republic 
of Serbia, ‘Conclusion on the adoption of the IPARD programme for the Republic of Serbia for the period 2014–2020’ (Nos 30/2016-3, 
84/2017-30, 20/2019-22, 55/2019-55). 

113 

 
 
                                           
Figure 56. Structural and rural development measures (2010–2019) 

Source: RS APMC database (2020). 

Other measures related to agriculture in the previous decade were focused mostly on food safety and research, 
development, advisory and expert services (Figure 57). Funds for these purposes increased through the period, 
reaching a maximum level in 2019 of EUR 35.1 million, namely 5.7 times more than in 2010. 

Figure 57. Other measures related to agriculture (2010–2019) 

Source: RS APMC database (2020). 

Unlike in 2010, when research, development, advisory and expert services dominated, the rest of the period was 
characterised by a dominance of food safety measures. All these measures, especially food safety measures that 
include veterinary and phytosanitary programmes, are implemented by the MAFWM regularly. 

Other transfers (not to agriculture directly) also increased, reaching their maximum in 2017 of EUR 6.6 million. 
Almost  all  of  these  funds  are  intended  for  the  forestry  sector  for  sustainable  forest  development  and 
improvement. 

7.6. 

EU approximation process 

After  the  European  Commission’s  recommendation  in  October  2011,  Serbia  gained  EU  candidate  status  on 
1 March  2012.  The  EU  accession  negotiations  for  Serbia’s  membership  of  the  EU  were  opened  officially  on 
21 January  2014  at  the  Intergovernmental  Conference.  The  screening  process  for  the  negotiating  chapters 
related to agriculture (Chapters 11, 12 and 13) lasted from September 2013 to March 2015. 

In the screening report for Chapter 11 (agriculture and rural development), the European Commission defined 
two opening benchmarks for this chapter: (i) Serbia presents to the Commission an action plan, which will serve 
as  a  basis  for  the  transposition,  implementation  and  enforcement  of  the  acquis  in  agriculture  and  rural 

114 

 
 
 
development and (ii) Serbia has submitted the request for entrustment with budget implementation tasks for 
IPARD II  to  the  Commission,  in  accordance  with  the  provisions  of  Commission  Implementing  Regulation 
447/2014. 

Both opening benchmarks were fulfilled by negotiating group 11. The second opening benchmark was fulfilled in 
December 2015, by submitting a request for entrustment with budget implementation tasks for IPARD II to the 
Commission,  whereas  the  first  benchmark  was  fulfilled  at  the  end  of  2018,  adopting  the  action  plan  for 
Chapter 11 by the Government  of the Republic of Serbia.  Preparation of the opening benchmark  assessment 
report by the European Commission is still pending. 

The  negotiations  in  Chapter 13  (fisheries)  were  not  conditioned  by  any  opening  benchmark  and  they  were 
opened in June 2018 by presenting the Serbian negotiating position for Chapter 13. In the area of Chapter 12 
(food  safety,  veterinary  and  phytosanitary  policies),  three  opening  benchmarks  have  been  received,  whose 
fulfilment is ongoing. 

Serbia  has  developed  a  strategic  framework  for  the  harmonisation  of  the  national  agricultural  and  rural 
development policies with the CAP. In that sense, all strategic and programme documents are in line with the 
action  plan  for  Chapter 11,  which  contains  all  of  the  steps  and  activities  planned,  and  their  interactions,  for 
adjusting to the CAP. 

Serbia  already  applies  some  CAP-like  agricultural  and  rural  development  schemes,  but  they  are  not  fully 
harmonised with the acquis. Nevertheless, there is a clear plan for achieving compliance with the CAP, but the 
level of realisation of this plan must be monitored in the future. 

The most significant progress made has been in starting the IPARD II process. It is a demanding process requiring 
the  establishment  of  a  fully  functional  paying  agency,  including  an  appropriate  administrative  and  IT 
infrastructure and environment, among others. 

Agricultural statistics, provided by the SORS, are harmonised largely with the EU acquis, ensuring that data are 
comparable with EU statistics. The most extensive source of data is the 2012 agricultural census, followed by the 
orchard survey for 2017 and the farm structure survey for 2018. In addition, a lot of annual surveys are conducted 
by  the  SORS  in  the  fields  of  crop  production,  livestock  production,  fisheries,  forestry  and  environmental 
protection, as well as in other fields of agriculture. Data are sent to Eurostat regularly in accordance with acquis 
requirements. The MAFWM is the administrative source for some statistical data too (organic production, milk 
delivered by dairies, pesticide statistics, subsidies payments, FADN data (42), etc.). 

7.7.  Discussion, conclusions and recommendations 

Serbian agriculture in the last decade has been characterised by overall slow growth. The farm structure, in terms 
of  farm  size,  indicates  an  uneven  distribution  and  uneven  development  of  farms  across  the  country.  While 
medium- and large-scale holdings dominate in Vojvodina, south and east Serbia are characterised by small-scale 
holdings. This indicates significant differences not just in the farm structure between these regions, but also in 
the  possibilities  for  growth  and  modernisation  through  increasing  productivity,  decreasing  costs,  the  use  of 
technologies and economic diversification. 

Trade value has a steady increased owing to increasing exports and an export growth rate that was faster than 
that for imports. Therefore, the trade balance has also experienced increasing trend. A possible reason for this 
is that free trade agreements, which have allowed Serbia to gain preferential access to  certain markets, have 
started to be used to a  wider extent. In the previous period, Serbia implemented greater trade  liberalisation 
under  the  SAA  and  signed  several  new  free  trade  agreements,  which  called  into  question  its  ability  to  face 
competition in the international markets. Nevertheless, foreign trade data show that increasing exports and a 
growing trade balance, as well as an agriculture and food industry sector that remains one of the few sectors in 
the Serbian economy with a positive trade balance, justify the opening of the sector to international markets. 

Agriculture is one of the few sectors in the Serbian economy with a positive foreign trade balance. The structure 
of exports is not optimal, as imports are dominated by primary agricultural products (two thirds), while processed 
agricultural products make up only about a third of exports. 

Cereals are the most dominant type of crop in crop production, and the growing exports are based mostly on 
cereals, oilseeds and fruit and vegetables. This shows that Serbia has significant untapped possibilities, which 

(42)  www.fadn.rs 

115 

 
                                           
could  be  improved  through  increasing  irrigation  infrastructure,  increasing  production  in  protected  areas 
(greenhouses) and adding value through on-farm processing. By focusing on high-value products, Serbia could 
improve the foreign trade balance and sector profitability. Serbia’s farm land is small and fragmented and, as a 
consequence,  competitiveness  in  most  cases  cannot  be  achieved  through  economies  of  scale,  but  can  be 
improved by adding value to products by improving processing, the implementation of quality standards, etc. 
The path for achieving this goal lies in increasing cooperative activity, knowledge transfer, financial support, etc. 

The current policy framework has a strong emphasis on direct support per area and animal, and it funds rural 
development measures only modestly. This distribution of subsidies is slowing structural reforms. In recent years, 
the situation has been improving; marketing and direct support is decreasing, accounting in the last 3 years of 
the period analysed for slightly more than 60 % of the agricultural budget. Positive trends were seen in 2017–
2019  in  terms  of  increased  support  for  structural  and  rural  development  measures,  accounting  for  between 
EUR 50 million  and  EUR 60 million  annually.  Major  changes  in  policy  led  to  increases  in  direct  payments  to 
producers  (based  on  output  and  area/head)  from  EUR 6.8 million  in  2010  to  EUR 216 million  in  2019  and 
increases in their proportion of total market and direct producer support measures, namely by 93.5 percentage 
points in the last decade. From the other side, input subsidies have decreased, from EUR 135.1 million in 2010 
to  only  EUR 5.1 million  in  2019,  with  a  tendency  for  total  transformation  into  direct  payments  to  producers 
(except insurance subsidies). The maximum eligible area for per-hectare payments for crops is still 20 ha, which 
was set in 2015. 

Unbalanced support among farmers, for example those in the central part of Serbia receiving lower amounts 
than farmers in the province of Vojvodina, who receive the majority of funds, is worsening the (already deep) 
regional disparities. There were higher compensatory stimulating allowances for holdings in less-favoured areas, 
but  the  measures  are  not  tailored  to  their  specific  needs  and  there  is  a  lack  of  knowledge  and  information, 
capacities, etc. 

The policy framework has been significantly improved by the adoption of several key legal and strategic acts, 
which  directed  policy  development  towards  harmonisation  with  the  CAP.  Direct  payments  (in  livestock 
production particularly) are still dominant in the agricultural policy, but rural development has been increasingly 
supported, aided by the beginning of the use of IPARD funds. 

Agricultural policy needs to tackle the ban on GMO products, as this a significant limiting factor for the Serbian 
livestock sector. Serbian producers are not allowed to use GMO feed and, as a consequence, production is more 
expensive. On the other hand, animal products produced using GMO feed are imported freely in Serbia. 

The slow progress in inspection service reform is evident. Phytosanitary and veterinarian border inspection and 
country inspection services are not performing inspections based on risk analyses, causing inefficient inspection 
control, long time retentions at the borders, etc. 

Some progress was made in harmonisation with the acquis in the pre-accession period. The process of making 
adjustments to domestic agricultural policy in line with the CAP has so far been insufficiently coordinated. The 
low level of usage of IPARD funds is a consequence of insufficient capacities of the paying agency, insufficient 
coordination between IPARD authorities and an inadequate legal framework. 

Policy recommendations 

Serbia  has  significant  potential  for  improving  the  competitiveness  of  the  agricultural  sector  and  for  rural 
development,  namely  by  setting  up  an  adequate  policy  framework  and  enhancing  the  capacities  for  its 
implementation.  To  increase  the  competitiveness  of  the  agriculture  sector  and  improve  the  position  of 
producers, the following activities need to be considered. 

There are several recommendations in terms of data collection and statistics. Namely, it is recommended that 
the current statistical classification of settlements by type (urban and other) be abandoned and the classification 
of NUTS level 3 areas according to the accepted urban–rural typology of the European Commission and Eurostat 
be applied instead. It is also recommended that the SORS classify the spatial units at the municipal level (LAU 
level 2) according to the degree of urbanisation DEGURBA methodology (which is expected after the 2021 census 
of the population, households and dwellings). Finally, the monitoring of labour consumption in agriculture in 
AWUs should be included within the economic accounts for agriculture and a farm structure survey should be 
carried out in the inter-census period every 3 years. 

116 

 
The farm register needs improvement: as the main database for policy implementation, it needs to be structured 
at the most detailed level, with a possibility for data cross-checking and to obtain timely information for decision-
making.  The  annual  renewal  of  registrations  must  be  mandatory,  regardless  of  whether  the  parameters  of 
production or the farm status change. Promotion and awareness raising of the advantages of registration would 
lead to an increased number of registered holdings. 

With regard to the agrarian policy, the budget structure needs to be updated further by decreasing the allowance 
for direct payments in favour of allowances for rural development measures. Furthermore, the inclusion of larger 
areas  in  the  system  of  subsidies  deserves  attention:  from  2015,  the  eligible  area  for  payment  per  area  was 
decreased from 100 ha  to 20 ha  per holding. It resulted  in the splitting of farms between family members to 
avoid limitation. This limitation did not achieve the budget savings planned, and instead created an additional 
administrative burden. A possible compensation for the inclusion of larger areas in the payment system is to 
adjust the limitation on total received payments (the level of modulation). This policy measure would be directed 
towards introducing decoupled area payments (which would be more in line with the CAP). 

Subsidies for organic production are based on measures for conventional production (with a certain percentage 
added).  Organic  production  measures  need  to  be  decoupled  from  conventional  production  support,  as  the 
organic sector has different requirements. 

Equal access to the state land lease needs to be facilitated: currently, livestock producers are prioritised in state 
land utilisation, namely the possibility of renting state land is based on owning a certain number of animals on a 
holding. Public debate sets out the demands for equal treatment of all participants in agriculture, and this should 
direct the land policy transformation. 

A (CAP-like) scheme should be created for small farmers who declare themselves to be non-commercial (and/or 
meet certain eligibility criteria), granting them a certain fixed amount annually, replacing all other payments. This 
would  reduce  the  administrative  burden,  as  there  would  be  a  smaller  number  of  applications  for  other 
(commercial) schemes, which would save time and mean funds were better targeted. 

The revolving fund for agricultural loans should be (re)established: the current implementation mechanism for 
agricultural loans, implemented by the MAFWM, through subsidising part of an interest rate, should be replaced 
with a revolving fund, which  will raise funds from loan repayments and provide additional funds through the 
payment  of  (preferential)  interest  rates.  The  loans  should  be  for  an  investment  purpose  and  should  have  a 
medium-term repayment period (3–5 years). The implementer of the scheme would be the MAFWM or another 
authorised body, and the processing of credit would be delegated to contracted banks. 

Market  and  quality  standards  should  be  introduced  (SWG,  2020).  Introducing  market  standards  is  necessary 
primarily for the fruit and vegetable sector, but also in the grain, eggs and meat sectors. Therefore, introducing 
CMO rules is required in the future, which not only would lead to better product valorisation on the market, but 
would also be a step forwards in alignment with the CAP. These standards would include market standards for 
fruit and vegetables, standards for eggs, carcass classification on slaughtering lines, etc. In addition to market 
standards,  quality  standards  should  also  be  established.  The  sectors  that  require  quality  standardisation  are 
primarily  the  dairy  and  grain  sectors.  In  the  area  of  grain  production,  there  is  a  need  to  introduce  quality 
standards  for  wheat,  which  is  required  by  the  strong  export  orientation  of  the  commodity.  Furthermore, 
introducing quality standards for wheat would require investments in warehouses and warehousing equipment 
for  categorisation. This should be an object  of support  by the state bodies, and it would facilitate the transit 
period  for  producers  and  processors.  A  similar  need  also  exists  in  the  dairy  sector,  as  dairies  themselves  are 
authorised to assess raw milk quality, which can lead to an underestimated price, to the detriment of primary 
producers.  Therefore,  the  national  reference  laboratories  need  to  be  involved  in  milk  control  at  the  level  of 
facilities. Moreover, payments per quality class should be implemented in the milk premium, which would lead 
to budgetary savings and would improve raw milk quality. 

In terms of agricultural associations and cooperatives, establishing a stimulating legal framework for agricultural 
associations  is  one  of  the  most  important  milestones  for  improving  Serbian  agriculture’s  competitiveness. 
Agricultural cooperatives are lagging tens of times behind the EU in number, activity and assets. The greatest 
barrier to cooperative development is the inadequate legal framework. The law on cooperatives (Official Gazette 
of the Republic of Serbia No 112/2015) has shortcomings, such as the fact that legal entities cannot be members 
of  cooperatives,  agricultural  saving  cooperatives  are  not  allowed,  ownership  is  unclear  (i.e.  members’  shares 
cannot be sold to other members), cooperatives’ reserve fund is not clearly established, cooperative audits are 
lacking guidance, cooperative auditors are not licensed and, in the case of a cooperative closing, the remaining 

117 

 
assets  go  to  the  cooperative  association  without  a  clear  procedure.  Additionally,  Serbia  is  among  the  few 
countries in the world with cooperative ownership as a third type of ownership defined in the constitution of the 
Republic of Serbia, which creates uncertainty among cooperative members regarding if their cooperative shares 
are at their full disposal. Another recommendation is that producers’ organisations be established in accordance 
with CMO rules. 

Support for producers’ associations needs to be predictable in the long term and needs to be available only for 
real cooperatives doing business with their members. The current support for cooperatives is ad hoc and rare. 
Good examples of this can be found in the EU; for example, in Italy, agricultural cooperatives doing business with 
more than 50 % of their members receive tax reliefs. This approach could avoid the establishment of associations 
only to receive support, without any other intention, which has often happened previously. 

Other recommendations can also be derived from the situation and policy analysis. The ban on GMO products is 
one of the most important limiting factors of the Serbian livestock sector. Serbian producers are not allowed to 
use  GMO  feed  and,  as  a  consequence,  production  is  more  expensive.  On  the  other  hand,  animal  products 
produced using GMO feed are imported freely in Serbia. This creates unfair conditions for the Serbian livestock 
sector. The solution can be found in two areas: first, GMO production should be allowed and, second, an effective 
national non-GMO animal products quality scheme should be introduced, which would allow provide a dedicated 
source of animal products produced without GMO use and create the possibility for higher pricing. 

Conditions need to be created for the removal of the pork EU export ban. Serbia is not permitted to export swine 
meat or to transport swine meat through the EU owing to the outbreak of swine plague. The first step towards 
this  goal  has  been  taken,  namely  vaccination  against  this  disease  has  stopped.  The  second  step  will  be  the 
introduction of a veterinarian indemnity fund or other compensation schemes to compensate farmers in the case 
of the necessity for heard eradication. The main purpose of compensation schemes is to motivate farmers to 
report any suspicions of the disease. 

Foodstuff  geographical  indication  schemes  should  be  further  developed.  The  current  law  on  indications  of 
geographical origin (Official Gazette of the Republic of Serbia Nos 18/2010 and 44/2018) is not harmonised with 
the EU acquis. The new draft law is, according to an SWG analysis (SWG, 2020), fully compliant with EU regulation 
and could enable Serbian producers to register products under a geographical indication in the EU. In addition, 
introducing protected designations of origin and protected geographical indications should be supported to a 
wider extent, focusing on geographical indication protection at the EU level. There is an insufficient number of 
products protected within the EU framework. 

Risk management instruments in agriculture need to be developed. Serbia is among the last countries in Europe 
to  implement  agricultural  insurance.  It  is  estimated  that  only  5 %  of  parcels  are  insured.  The  recommended 
measures include the improvement of hydrometeorological data, coupling subsidies with mandatory insurance 
of  the  subsidy’s  investments  (which  has  often  been  a  successful  practice  in  the  EU  and  the  United  States), 
appointing a central organisation to be in charge of collecting the data on agricultural insurance, the introduction 
of new technologies that are important for area based insurance and so on. 

Finally,  phytosanitary,  veterinarian  and  agricultural  inspections  need  to  introduce  inspection  based  on  risk 
analyses in line with EU practice. 

There  are  many  issues  in  transitional  agricultural  sectors  such  as  that  in  Serbia,  and  the  recommendations 
presented are the most important, for now. It can be concluded that there is a distinct need for well-planned 
structural reforms on Serbia’s long journey towards improving the agricultural sector’s competitiveness and rural 
development. 

References 

Agreement on stabilization and association between the European communities and their member states, of the 
one part, and the republic of Serbia – SAA, ("Official Gazette of the Republic of Serbia ", No. 83/2008) 

degree 

Eurostat’s 
https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Territorial_typologies_manual_-
_degree_of_urbanisation 

urbanisation 

typologies 

territorial 

manual 

of 

available 

at: 

FADN Serbia, available at: www.fadn.rs 

118 

 
 
Law  on  agriculture  and  rural  development  (Official  Gazette  of  the  Republic  of  Serbia  Nos 41/09,  10/13  and 
101/16) 

Law on cooperatives (Official Gazette of the Republic of Serbia No 112/2015) 

Law on indications of geographical origin (Official Gazette of the Republic of Serbia Nos 18/2010 and 44/2018) 

Law  on  subsidies  in  agriculture  and  rural  development  (Official  Gazette  of  the  Republic  of  Serbia  Nos 10/13, 
142/14, 103/15 and 101/16) 

Ministry of Agriculture, Forestry and Water Management of the  Republic of Serbia - MAFWM (2019b): Green 
book 1. 

Ministry of Agriculture, Forestry and Water Management of the Republic of Serbia  – MAFWM (2019a): Green 
book 2. 

National program for agriculture for the period 2018-2020 ("Official Gazette of RS", No. 120/17) 

Regional Rural Development Standing Working Group - SWG (2020), Schemes of Geographical Indications and 
Traditional Specialities in South East Europe, SWG, Skopje, North Macedonia, ISBN 978-608-4760-31-3, available 
at: seerural.org/wp-content/uploads/2020/09/Food-Quality-Policy-Assessment.pdf 

REPUBLIC OF SERBIA IPARD PROGRAMME FOR 2014-2020 (Conclusion on the adoption of the IPARD program for 
the Republic of Serbia for the period 2014-2020; 30 / 2016-3, 84 / 2017-30, 20 / 2019-22, 55 / 2019-55, 38 / 2021-
21) 

RS APMC database (2020) -The agricultural statistics database was compiled for Serbia under the SWG Institute 
for Prospective Technological Studies (IPTS) projects (http://app.seerural.org/agricultural-statistics/). 

Statical Office of the Republic of Serbia - SORS (2013): Census of Agriculture 2012 AGRICULTURE IN THE REPUBLIC 
OF SERBIA, ISBN 978-86-6161-077-6,  

Statical  Office  of  the  Republic  of  Serbia  -  SORS  (2018),  Farm  structure  survey  –  2018,  available  at: 
www.stat.gov.rs/en-us/vesti/20190418-anketa-o-strukturi-poljoprivrednih-gazdinstava/?s=130002 

Statical  Office 
https://data.stat.gov.rs/?caller=SDDB 

the 

of 

Republic 

of 

Serbia 

- 

SORS 

(2020),  Database, 

available 

at: 

Strategy for the agriculture and rural development of the Republic of Serbia for 2014–2024 (Official Gazette of 
the Republic of Serbia No. 85/2014) 

The national agriculture programme for 2018–2020 ("Official Gazette of the Republic of Serbia ", No. 120/17) 

119 

 
 
8.  CASE STUDY: TURKEY 

Ahmet Ali Koç (43) and Ahmet Bayaner (44) 

8.1. 

Introduction 

The Turkish economy is among the 20 largest economies in the world. It is an upper-middle-income country and 
has  a  population  of  approximately  83 million  with  just  over  1 %  growth  rate  annually.  Turkey  has  been 
undergoing  a  significant  socioeconomic  transformation  since  the  1980s.  An  economy-wide  agenda  of  policy 
reform has been reshaping the country since 2001. The Turkish economy has experienced high rates of average 
annual growth, except for the years of the global economic crisis, thanks to these economic reforms. This growth 
performance is a record among OECD countries (OECD, 2011; TurkStat, 2020a). 

A number of laws and regulations have also contributed to this economic performance. In the area of agriculture 
and  rural  development,  the  laws  enacted  are  related  to  sugar,  tobacco,  pasture,  fresh  fruit  and  vegetable 
wholesale  markets,  agricultural  sales  cooperatives  and  unions,  food,  breeder  rights,  producer  organisations, 
animal health arid surveillance, animal welfare, soil conservation and land use, agricultural insurance, organic 
agriculture, seeds, the veterinary framework, phytosanitary and quarantine issues, organised agricultural regions 
and the agricultural framework. The agriculture law adopted in 2006 created the legal basis for the management 
systems necessary for the implementation of the acquis. The Ministry of Agriculture has been reorganised twice, 
in 2011 and in 2018. 

The state economic enterprises have carried out agricultural policy measures for decades including after they 
were privatised and restructured during the 1990s and early 2000s. For instance, agricultural sales cooperative 
unions  (ASCUs),  the  Turkish  Grain  Board,  the  state-owned  tobacco  monopoly  TEKEL,  the  state-owned  sugar 
enterprise TŞFAO, the Meat and Milk Board and the state-owned Agricultural Bank were the main state economic 
enterprises.  These  institutions  were  responsible  for  price  support  levels,  purchasing  crops,  providing  credit, 
distributing budgetary support, instigating marketing regulations and providing inputs to farmers. ASCUs were 
reoriented and became limited to their duties on behalf of government support. TEKEL and some of the sugar 
factories were privatised during the 2000s. The Turkish Grain Board, the Meat and Milk Board and Agricultural 
Bank  are  still  active  in  the  agricultural  sector.  In  addition,  the  Agricultural  Credit  Cooperatives  of  Turkey  has 
played an active role in input distribution and the marketing of agricultural and processed food products. 

The  need  to  reform  the  country’s  agricultural  policies  stems  not  only  from  the  EU,  as  Turkey  is  a  candidate 
country, but also from the changing domestic environment and bilateral and multilateral trade relationships (i.e. 
WTO commitments). Although Turkey has made progress towards full EU membership, more attention needs to 
be given to the adjustment of the agri-food sector to the new policy environment and to CAP harmonisation. 

The  national  rural  development  strategy  for  2007–2013  was  adopted  in  January  2006,  and  later  revised  and 
adopted in 2014 for 2014–2020. Along with the strategy, the rural development action plan for 2013–2015 was 
put in place in 2015. The national rural development strategy drew up a comprehensive policy framework for 
rural development in the country. The IPARD programmes are important parts of this strategy (MoAL, 2015). 

8.2. 

State of the agri-food sector 

Agriculture is a very important economic activity in Turkey. The sector was the largest employer in the country 
until recently. It used to be a major contributor to the country’s GDP, although it has been declining in importance 
compared  with  the  service  and  industrial  sectors  owing  to  rapid  industrialisation  and  government  policies. 
Nevertheless, it accounts for a significant percentage of exports and is key to rural development. Its contribution 
to GDP was almost 50 % in 1950, 25 % in 1980, 15.3 % in 1990, 11 % in 2005 and about 8 % in 2019 (Kaul and 
Hoelgaard, 2019). Some key macroeconomic indicators are reported in Table 28. 

Turkey  is  the  12th  largest  country  in  the  world  in  terms  of  agricultural  land.  Cultivated  land  takes  up  about 
24 million ha.  Turkey  is  the  world’s  seventh  largest  agricultural  producer  and  is  an  important  exporter  of 
agricultural  commodities  on  world  markets.  Agriculture  still  plays  a  fundamental  role  in  Turkish  society, 
employing about one fifth of the workforce and generating most of the income and employment in rural areas. 
According to the data obtained from the Turkish Statistical Institute (TurkStat, 2020b), the proportion of total 
employment contributed by primary agriculture has declined, and was about 18 % in 2019; its contribution to 

(43)   Department of Economics, Akdeniz University, Antalya, Turkey; alikoc@akdeniz.edu.tr 
(44)   Department of Business Administration, Akdeniz University, Antalya, Turkey; abayaner@akdeniz.edu.tr 

120 

 
                                           
GVA was about 6.5 % in 2019 and agri-food products made up around 12.5 % of total exports in 2019, having 
remained stable at this level over the period analysed. 

Table 28. Key macroeconomic indicators 

Indicator 

2010 

2011 

2012 

2013 

2014 

2015 

2016 

2017 

2018 

2019 

Population 
(thousand 
persons) 

Population 
density 
(inhabitants/km2) 

GDP  (at  current 
prices,  million 
EUR) 

Value  added  (at 
current 
prices, 
million EUR) 

73 723 

74 724 

75 627 

76 668 

77 696 

78 741 

79 815 

80 811 

82 004 

82 886 

94.1 

95.4 

96.5 

97.8 

99.2 

100.5 

101.9 

103.1 

104.7 

105.8 

583 112  600 447  681 136  716 619  707 130  778 906  786 440  761 739  663 697  680 590 

512 685  528 202  601 180  627 765  625 823  686 826  693 731  675 715  594 971  613 125 

GDP growth (%) 

8.5 

11.1 

4.8 

8.5 

5.2 

6.1 

3.2 

7.5 

2.8 

0.9 

GDP  per  capita 
(EUR) 

GDP per capita in 
PPS (EUR) 

GDP per capita in 
PPS (EU=100; %) 

Inflation (%) 

7 910 

8 035 

9 006 

9 347 

9 101 

9 892 

9 853 

9 426 

8 093 

8 211 

13 143 

14 131 

16 036 

16 766 

18 044 

23 093 

23 656 

24 733 

23 859 

24 896 

52 

8.6 

57 

6.5 

59 

8.9 

62 

7.5 

65 

8.9 

67 

7.7 

66 

7.8 

67 

65 

64 

11.1 

16.3 

15.2 

PPS, purchasing power standards. 

Note: The total area of Turkey is 783 577 km2. 

Source: TurkStat (2020b). 

Family owned farms are dominant in Turkish agriculture. Most of the farm labour comes from family members 
(half  of  the  labour  force  is  female)  and  works  mainly  as  unpaid  family  labour.  The  agriculture  structure  is 
characterised by a  large  number of small and fragmented  farms. The 2001 agricultural  census recorded over 
3 million  agricultural  holdings.  The  number  of  farmers  registered  to  the  farmer  registry  system  surpassed 
2.7 million in 2003 and 2004. Thereafter, the number started to decline and during recent years has been around 
2.2 million and agricultural employment has reduced in line with this. The average number of farmers registered 
across the period analysed (2010–2019) is about 2.2 million (with 15 million hectares of land). 

Despite the country’s large number of small farms, commercial farms have emerged in the last 20 years. The 
pattern of land ownership is highly skewed; it varies regionally owing to differences in geography and the crops 
grown. A high proportion of farmers cultivate their own small area of land. About 65 % of farms have less than 
5 ha of land and 83 % have less than 10 ha. These small farms are mainly self-sufficient and have a lower than 
average income. Farms cultivating more than 20 ha of land make up about 6 % of all farms. According to the 2001 
agricultural  census,  the  national  average  size  of  farm  holdings  is  6.1 ha,  with  an  average  number  of  six  plots 
(Bayaner, 2007; TurkStat, 2020a). The size of the average land parcel has, until recently, been decreasing, largely 
because of inheritance laws. However, the inheritance law was changed in 2012 and parcels under 2 ha in dry 
areas (and 1 ha in irrigated areas) are not allowed to be divided among the successors of farmers. According to 
the farm holding structure survey of 2016, the average farm size is 7.6 ha (TurkStat, 2018). 

A relatively large number of the country’s more specialised farms are located in the Aegean and Mediterranean 
regions.  In  subsistence  and  semi-subsistence  farming,  productivity  is  low,  hidden  unemployment  is  high  and 
competitiveness is poor; nonetheless, these farms are of crucial importance in providing income security and 
represent the source of livelihood for the majority of Turkey’s rural population (OECD, 2011). 

A wide range of farming activities are carried out in Turkey owing to its climatic and geographical conditions. 
Good soil fertility, an adequate climate and abundant rainfall in some regions permit almost any kinds of crops 
to be grown. Arable crops cover more than 50 % of the agricultural area, of which about 11 % is fallow land and 

121 

 
18 % is irrigated land. Permanent crops occupy 8 % of UAA. Permanent meadows and pastures take up about 
38 % of agricultural land. Arable farming accounts for about 75 % of output value. Fruit and vegetables make up 
about 44 % of crops. The main crops are wheat, barley, maize, sugar beet, cotton, potatoes, tobacco, tomatoes, 
cucumbers, dried onions, watermelons, apples, citrus fruit, grapes, figs, hazelnuts, olives and tea. The livestock 
subsector consists of cattle, dairy, buffalo, poultry, sheep and goats. Turkey is a food self-sufficient country and 
is a net exporter of agri-food products (TurkStat, 2020a). According to the farm holding structure survey of 2016, 
irrigated land accounts for 31.4 % of total agricultural land (TurkStat, 2018). 

Turkey is the world leader in the production of hazelnuts, sultanas/raisins, dried figs and dried apricots. It is the 
second  largest  producer  of  chestnuts,  pistachios,  cucumbers  and  watermelons,  the  third  largest  producer  of 
apples,  chickpeas,  onions,  olives  and  sheep’s  milk,  and  the  fourth  largest  producer  of  fresh  vegetables  and 
grapes, tobacco, tea and raw wool. The production of wheat and cotton is also important, with Turkey being one 
of the top 10 producers of fruit, wheat and cotton in the world. The country is also one of the leading honey 
producers in the world (OECD, 2011). 

Turkey  produces  annually  on  average  35.3 million  tonnes  of  cereals,  30.3 million  tonnes  of  vegetables, 
18.9 million tonnes of fruit, 18.5 million tonnes of milk, 1.9 million tonnes of poultry and 1.2 million tonnes of 
red meat. The major industrial crops produced in Turkey are cotton, sugar beets and tobacco. Turkey is one of 
the largest producers of cotton in the world, which is a key element in the country’s wider economy, providing 
fibre for textiles. Therefore, Turkey is among the world’s leading textile exporters, with textiles accounting for a 
large percentage of its exports. Turkey has a comparative advantage in many agricultural products. Its foreign 
trade balance in agriculture is positive and its main trading partners are the EU, the United States, the Middle 
East and Russia (TurkStat, 2020a). 

8.3. 

Socioeconomic issues underlying rural areas 

There are two different definitions of rural areas in Turkey, namely based on population and on administrative 
units classified by TurkStat. Settlement areas with a population less than 20 000 are classified as rural areas, and 
counties and villages are also assumed to be rural areas. The village law sets out that areas with a population 
under  2 000  are  villages,  areas  with  a  population  between  2 001  and  20 000  are  counties  and  areas  with 
population of more than 20 000 are cities (KB, 2018). 

Law No 6360, enacted in 2012, created new metropolitan cities, whereby 10.4 million people living in 16 000 
villages  and  counties  were  regarded  urban  citizens.  There  are,  based  on  this  law,  34 434  villages  and  41 004 
counties in Turkey. There are also 4.3 million households in rural areas, constituting 21 % of all households in 
Turkey.  The  average  household  size  is  4.8 persons.  About  5.1 %  of  the  total  rural  population  lived  on  under 
USD 4.3 per day in 2013, whereas this was true of only 0.6 % of the population in cities and 2.1 % of the total 
population. The percentage of those classified as the rural poor is, however, declining, namely it is now below 
5 % (Doğan and Yardımcı, 2019). Before law No 6360 was enacted in 2012, 25 % of the total population was rural. 
However, this percentage declined dramatically in 2013 to 14 % (TurkStat, 2020a) owing to new definition of 
rural areas introduced. An OECD-type classification of rural areas has been developed by TurkStat, but has not 
yet been published for wider public use. 

The active and non-active labour population by gender is presented in Table 29. The proportion of people older 
than  65  years  in  rural  areas  is  increasing;  this  group  made  up  9.6 %  of  the  rural  population  in  2007,  which 
increased to 11.3 % in 2012. This is also evident from the farmer registry system. This trend is an indication of 
increased  migration  of  young  people  out  of  rural  areas.  On  the  other  hand,  all  rural  areas  have  access  to 
electricity,  drinking  water  and  hygienic  conditions  (Doğan  and  Yardımcı,  2019).  According  to  the  Turkish 
agricultural outlook field research farm survey of 2019, which was undertaken by the Credit Registry Office of 
Commercial Banks (KKB), the average age of farmers was 46 years (KKB, 2019). 

The employment statistics for agriculture are presented in Table 30. Agriculture accounts for a large percentage 
of rural income. However, agriculture accounts for only about 6.5 % of GDP and employs more than 5 million 
people (making up about 18 % of total employment). Women make up 28.5 % of the labour force employed in 
agriculture, whereas 15.5 % of all men are employed in agriculture. The per capita GDP in agriculture is about 
half of the national average. About 7.3 % of the rural population is illiterate, 52.3 % graduated from secondary 
school, 8.9 % graduated from high school and 2.9 % are university graduates (KB, 2018; TurkStat, 2020b). 

122 

 
Table 29. Active and non-active labour population numbers in Turkey (by gender, 2010–2019) 

Population 
characteristic 

and 

Active 
non-active 
population 
(over 
15 
years of age) 

2010 

2011 

2012 

2013 

2014 

2015 

2016 

2017 

2018 

2019 

52 541 

53 593 

54 724 

55 608 

56 986 

57 854 

58 720 

59 894 

60 654 

61 469 

  Male 

25 801 

26 320 

26 951 

27 411 

28 145 

28 573 

29 031 

29 649 

30 007 

30 372 

Female 

26 740 

27 273 

27 773 

28 197 

28 841 

29 281 

29 689 

30 244 

30 647 

31 097 

Employed 
population 

22 595 

24 110 

24 821 

25 524 

25 933 

26 621 

27 205 

28 189 

28 738 

28 080 

  Male 

16 170 

17 137 

17 512 

17 883 

18 244 

18 562 

18 893 

19 460 

19 720 

19 156 

Female 

6 425 

6 973 

7 309 

7 641 

7 689 

8 058 

8 312 

8 729 

9 018 

8 924 

Unemployed 
population 

3 047 

2 615 

2 518 

2 747 

2 853 

3 057 

3 330 

3 454 

3 537 

4 469 

  Male 

2 088 

1 730 

1 635 

1 714 

1 813 

1 891 

2 006 

2 024 

2 081 

2 707 

Female 

959 

885 

883 

1 033 

1 040 

1 167 

1 325 

1 430 

1 455 

1 762 

Non-active 
population 
(not in labour 
force) 

26 901 

26 867 

27 385 

27 337 

28 200 

28 176 

28 185 

28 251 

28 380 

28 920 

  Male 

7 544 

7 453 

7 804 

7 814 

8 088 

8 120 

8 132 

8 165 

8 206 

8 509 

Female 

19 357 

19 414 

19 581 

19 523 

20 112 

20 056 

20 052 

20 085 

20 174 

20 411 

Source: TurkStat (2020b). 

Problems  in  Turkish  agriculture  are  generally  related  to  production  factors:  illiterate  and  unqualified  human 
resources, insufficient capital and abundant but unproductive land in some regions. Implementing the EU rural 
development  policy  in  Turkey  would  increase  the  size  of  holdings  and  reduce  the  number  of  agricultural 
employees. It is expected that product quality increases within agriculture could be more integrated with the 
processing industry and the market. 

Table 30. Employment in agriculture forestry, hunting and fishery sector, in 000, 2014–2019 
2018 
2015 

Employment statistics 

2016 

2014 

2017 

2019 

Total  number  employed 
in the sector 

5470 

5483 

5304 

5465 

5298 

5098 

Male 

Female 

<34 years 

35–65 years 

Without education 

2937 

2533 

1610 

3362 

1298 

With primary education 

3723 

With 
education 

high 

school 

358 

With higher education 

91 

Source: TurkStat (2020b). 

2956 

2527 

1553 

3400 

1213 

3779 

382 

109 

2993 

2472 

1473 

3439 

1076 

3818 

430 

141 

2944 

2354 

1375 

3365 

1051 

3649 

460 

138 

2856 

2242 

1356 

3190 

950 

3520 

455 

173 

2920 

2384 

1441 

3342 

1068 

3704 

405 

127 

123 

 
 
 
 
 
National policy framework 

Turkish agricultural policy has not changed considerably over time. The principal objectives of the policy are (RG, 
2006)  (i)  to  meet  the  food  security  needs  of  a  growing  population,  (ii)  to  increase  productivity  and  reduce 
vulnerability to adverse weather conditions, (iii) to improve self-sufficiency levels, (iv) to raise farm incomes and 
provide more stability, (v) to enhance competitiveness, (vi) to develop rural areas and (vii) to ensure food safety 
and harmonise the country’s agricultural and rural development policies and institutions with those of the EU. 

Turkish agricultural policy has a long history of agricultural price intervention; its roots go back to the early 1930s. 
The objectives of the agricultural policy in Turkey used to be set by annual programmes and development plans 
until  the  early  2000s  (Bayaner,  2007).  Before  2000,  the  Turkish  government  had  implemented  a  variety  of 
measures to fulfil these objectives. Domestic price support programmes were extended by means of intervention 
purchases  and  quantitative  import  restrictions  and  tariffs.  In  addition,  farm  inputs  including  credit  and 
investments in infrastructure supported these measures. Regional programmes are developed and implemented 
to reduce regional disparities in income and technology. Agricultural research, extension and training services 
are still funded by the government (Bayaner, 2007). Livestock sector policies include border measures, veterinary 
services and animal disease control, milk and suckler cow premiums, fodder crop input subsidies, and agricultural 
credit support. 

The inefficient and costly system of agricultural support policies has been criticised heavily. These policies have 
not only manifestly failed to enhance productivity, but have been a heavy burden on consumers and taxpayers 
and  have  been  a  source  of  Turkey’s  macroeconomic  problems.  The  Government  of  Turkey  embarked  on  a 
structural  adjustment  and  stabilisation  programme  of  historical  dimensions  –  the  agricultural  reform  and 
implementation programme – in 2001 focusing on several elements. The unsustainable and distorting system of 
subsidies for fertilisers, credit and price support that only benefited large-scale farmers and regressively taxing 
consumers were all phased out so that prices were in line with world market prices. Most of the state economic 
enterprises were privatised to reduce government involvement in the marketing and processing of agricultural 
products. An annual direct income support payment was granted per hectare to all farmers to cushion the losses 
associated  with  the  removal  of  administered  prices  and  input  subsidies.  Price  premium  payments  were 
implemented for oilseeds. Tea growers needing to prune trees were fully compensated for the costs incurred. A 
one-off farmer transition payment has been granted to cover the costs to divert farmers from over-produced 
hazelnuts  and  tobacco  to  other  commodities.  Agricultural  sales  cooperatives  and  their  unions  (ASCUs)  were 
granted financial aid for restructuring and transformation. 

The  agricultural  law  enacted  in  2006  moved  Turkey  further  away  from  the  principles  of  the  reformed  CAP. 
Producer  support  based  on  commodity  output  increased,  while  decoupled  direct  income  support  payments 
decreased gradually at first and thereafter were eventually abolished in 2009. Direct payments are now a fully 
coupled  system  in  which  payments  are  linked  with  production  in  plant  and  livestock  sectors.  Area-based 
payments (so-called ‘fertiliser’ and ‘diesel’ payments) are increasing. Fertiliser and diesel subsidy payments are 
based on cultivated land areas at varying rates differentiated according to the product groups. Moreover, import 
protection by ad valorem tariffs remains unchanged. 

The  measures  of  agricultural  support  used  until  2010  were  direct  income  support  payments,  price  premium 
payments,  compensatory  payments  for  farmer  transition,  livestock  support  (for  fodder  crops,  artificial 
insemination,  breeder  incentives,  milk  premiums,  risk-free  livestock  regions,  beekeeping  and  fisheries),  crop 
insurance  support,  rural  development  support  and  environmental  set-aside  (i.e.  the  conservation  reserve 
programme  (CATAK)).  Although  direct  income  support  has  been  implemented  for  fertiliser  and  diesel,  other 
forms are still applied. 

Turkey  has  taken  additional  measures  to  harmonise  its  agricultural  policies  and  institutional  framework  with 
those  of  the  EU.  These  include  agri-environmental  issues  and  good  practices  in  land  management  and  rural 
development  in  general.  In  the  area  of  rural  development,  the  EU’s  IPARD  programme  facilitates  Turkey’s 
alignment with the acquis concerning the EU CAP (OECD, 2011). 

A new support programme for agricultural products in Turkey was put in place in 2017. In total, 21 crops were 
determined to be strategic crops, with production most efficient in 30 basins characterised by different climate 
and  soil  characteristics.  These  crops (45)  are  strategically  important,  specific  to  the  region,  competitive  in  the 

(45)  The crops in question are wheat, barley, corn, rye, oats, triticale, cotton, paddy rice, tea, lentils, dry beans, chickpeas, safflower, soybean, 

sunflower, canola, hazelnuts, olives, potatoes, onions and forage crops. 

124 

 
                                           
market and have a supply deficit. Only wheat and forage crops are eligible for support payments in all  of the 
basins (Kaul and Hoelgaard, 2019). 

As regards risk management in agriculture, the agriculture insurance law (No 5363), enacted on 14 June 2005, 
provided  for  a  comprehensive  and  sustainable  agricultural  insurance  system  called  the  agricultural  insurance 
pool  (TARSİM).  The  objective  of  the  system  is  to  provide  income  stability  for  producers  by  protecting  them 
against all kinds of natural disasters. It provides farmers with insurance premium support. Government premium 
support  and  premiums  paid  by  farmers  are  collected  under  the  pool  and  used  for  compensation  of  farmers’ 
losses. The amount of the premium that farmers pay differs depending on the crop produced, namely between 
50 % and 67 %. Government premium support is included in the agricultural support budget. Participation in the 
scheme is voluntary for farmers (Kaul and Hoelgaard, 2019). 

The  national  rural  development  strategy  for  2007–2013  first  set  out  the  priorities.  These  priorities  are  still 
covered in the strategy paper (2014–2020), which can be categorised under five pillars: the rural economy, the 
rural environment, rural settlements, rural society and rural capacity development (MoAL, 2015), with the six 
priorities:  (i)  increasing  employment  and  income  generating  activities  in  rural  areas,  (ii)  strengthening  the 
capacity  for  the  efficient  utilisation  of  natural  resources,  (iii)  increasing  the  living  standards  of  the  rural 
population through the application of modern agricultural techniques, (iv) creating employment opportunities 
in  diverse  livelihoods  (including  tourism,  textiles,  handcrafts  and  forestry  products)  and  promoting  these  in 
disadvantaged areas, (v) promoting small and medium-sized enterprises and providing support for micro-finance 
and marketing and (vi) reducing inter- and intraregional disparities, reducing the migration flow from rural areas 
and strengthening participatory approaches though vocational training, extension and consultancy services. 

The  Agriculture  and  Rural  Development  Support  Institution  (TKDK)  implements  the  rural  development 
programmes using EU funds under IPARD I and IPARD II based on the principles and objectives in the national 
action  plan,  programme  and strategies.  TKDK  is  the  implementing  institution,  with  coordination  offices  in  42 
provinces.  The  objectives  of  IPARD  is  to  modernise  the  agricultural  sector  and  rural  areas  of  Turkey  in  a 
sustainable  manner  in  accordance  with  the  EU  acquis.  Other  strategic  targets  include  the  development  and 
diversification of the rural economy, attracting people to rural areas and increasing the quality of life in these 
areas,  and  the  preventing  migration  out  of  rural  areas.  IPARD I  funds  covered  2007–2013  and  IPARD II  funds 
covered 2014–2020 (MoAL, 2015). A total of EUR 1 048 million was granted under IPARD I, of which 25 % were 
domestic contributions from the government budget. IPARD II was initiated in February 2016, with a planned 
budget  of EUR 813.8 million, of which  EUR 615.5 million were EU contributions. The aid to be granted by the 
Turkish government amounted to EUR 198.3 million and the rest would be funded through private contributions. 
In  the  EU,  12 746  IPARD II  applications  were  received  and  3 446  projects  were  contracted,  with  the  EU’s 
contribution amounting to EUR 244.1 million by the end of 2020 (TKDK, 2020). The areas in which investments 
were made were agricultural holdings, processing and marketing activities, and farm diversification (European 
Commission, 2019; TKDK, 2020). 

The main goals and objectives of the Turkish agricultural policy, defined in the strategic plan of the Ministry of 
Agriculture and Forestry for 2018–2022, follow the main principles of the CAP. The goal of Turkish agricultural 
policy  is  to  achieve  a  more  competitive  and  sustainable  agricultural  sector,  with  increases  in  agricultural 
production and rural income. In addition, it aims to increase efficiency, quality and sustainability, while taking 
into account the WTO rules and the EU CAP (Kaul and Hoelgaard, 2019). 

8.4.  Measures and budgetary support for agriculture and rural development 

The  agricultural  budget  in  Turkey  has  increased  over  the  last  10  years  in  terms  of  Turkish  lira.  However,  the 
budget  has  decreased  in  terms  of  euros.  The  budget  was  EUR 2.7 billion  in  2019.  The  proportion  of  the 
agricultural  budget  in  terms  of  GDP  has  been  stable,  amounting  to  0.5–0.6 %.  The  proportion  of  the  total 
government  budget  allocated  to  agriculture  has  stayed  between  2.0 %  and  3.0 %.  The  largest  proportion  of 
agricultural payments go to market and direct producer support measures. The proportion going to structural 
and rural development measures has varied between 8 % and 21 % (Figure 58). 

There are two main measures making up market and producer support mechanisms: direct support and input 
subsidies. Direct payments account for about 70 % of the total market and direct producer support measures. 
Input  subsidies  follow  these  payments,  making  up  about  25 %  of  the  total  payments.  Disaster  and  other 
compensation  payments  and  market  support  payments  account  for  less  than  5 %  of  the  total  payments 
(Figure 59). 

125 

 
Figure 58. Total budgetary support to agriculture (2010–2019) 

Source: TR APM database (2020). 

Figure 59. Market and direct producer support measures (2010–2019) 

Source: TR APM database (2020). 

About half of the payments under the umbrella of structural and rural development measures are paid for rural 
economy and rural population measures. Payments for competitiveness measures make up the second largest 
group of payments, accounting for about 40–60 %, on average. Environmental and societal services account for 
about 6 % of total payments, on average (Figure 60). These transfers include IPARD payments. 

Figure 60. Structural and rural development measures (2010–2019) 

Source: TR APM database (2020). 

126 

 
 
 
 
 
The  EU  rural  policy  has  a  strong  bias  towards  agriculture,  as  the  funding  for  rural  policy  comes  from  the 
agriculture  budget.  Likewise,  the  Turkish  policy  paper  for  2006–2010  sets  a  target  of  rural  development 
accounting  for  10 %  of  total  agricultural  support  payments.  The  policy  paper  resulted  in  the  country’s  rural 
development approach becoming more in line with that of the EU. 

Under  the  other  measures  related  to  agriculture,  rural  development  and  expert  services  receive  all  of  the 
payments.  Food  safety  and  other  general  support  measures  did  not  receive  any  payments  in  this  category 
(Figure 61). 

Figure 61. Other measures related to agriculture (2010–2019) 

Source: TR APM database (2020). 

Agriculture law No 5488 states that the financing of agricultural support  programmes must be provided from 
budgetary and external sources. The law also indicates that the resources allocated from the national budget 
must not be less than 1 % of the gross national product, but the present implementation is very far away from 
this target. 

8.5. 

EU approximation process 

Adapting to the acquis would make farming more difficult in the current production environment and most of 
the farms will go out of business. Only labour-intensive small- and medium-scale farms may continue to produce. 

Turkey adopted the CATAK; however, its current alignment with the environmental acquis is limited. CATAK was 
designed to provide compensatory payments to farmers in areas facing environmental degradation in order to 
help them shift to permanent crops. Small farmers cannot make the necessary investment owing to insufficient 
own resources and the problems faced in accessing external credit to provide the safe and high-quality food that 
the industry requires. Turkey’s current trade situation is expected to change when becomes a full member. The 
country will adopt the common external tariff of the EU for every agricultural product. Turkey’s current tariff 
bindings are higher in some areas than those of the EU. Thus, the tariff gap between Turkey and the EU could 
increase. 

The implementation of the CAP requires strong management and control systems. EU rules for quality policy and 
organic farming should also be aligned with the rules. Turkey has been harmonising its policies with the EU CAP 
for about two decades. Recommendations by the Commission have been taken up, but not fully accomplished. 
Turkey still needs to adopt  a strategy for producing agricultural statistics and aligning its agricultural support 
policy (European Commission, 2019). 

An IACS has been developed and put in place recently. The FADN, covering all 81 provinces, has been integrated 
into  the  agricultural  production  and  registration  system.  Payments  need  to  be  linked  to  cross-compliance 
standards. Under the LEADER programme, 25 local action groups were established, which have been developing 
local  action  strategies.  Through  the  LEADER  and  the  National  Rural  Network  (NRN)  measures,  the 
implementation of the successful IPARD programme also involved civil society. 

CMO legislation should be developed and aligned with the EU CAP/CMO legislation. Turkey agreed to broaden 
the  scope  of  the  tariff  quota  for  meat  products  exported  from  the  EU.  This  is  important  for  transparent 
management of the import quota. The intellectual property law was adopted in 2017, which increased Turkey’s 

127 

 
 
level of alignment with the EU geographical indications legislation. In addition, further implementing regulations 
were  adopted  concerning  the  quality  policy.  The  mutual  registration  of  geographical  indications  has  been 
relaunched. Turkey’s organic farming legislation has been aligned with the EU acquis. The Turkish Accreditation 
Agency accredits organic agriculture control bodies (European Commission, 2019). 

Food  safety  in  the  EU  requires  a  high  level  of  hygiene  rules  for  foodstuff  production.  There  has  been  some 
progress in the area of food safety, veterinary and phytosanitary policy in the past year and in the enforcement 
capacity for animal welfare, food, feed and animal by-products and food safety legislation. Turkey has ratified 
the European Convention for the Protection of Animals kept for Farming Purposes. The full implementation of 
the  acquis  in  this  area  will  require  food  establishments  to  be  upgraded,  including  submitting  a  national 
programme and a monitoring plan, and progress to be made on addressing zoonoses. Some progress has made 
in aligning and implementing the acquis on general food safety, but it has been limited. Veterinary policies have 
not yet been fully aligned with the EU acquis. The identification and registration of bovines and small ruminants 
has continued. The regulation for identifying and monitoring of equine species and that concerning cats, dogs 
and ferrets were adopted (European Commission, 2019). 

Turkey  has  been  applying  measures  for  disease  outbreaks.  As  a  result,  the  region  of  Thrace  was  declared  a 
disease-free zone and strict movement controls have been maintained since then. A regulation on disease-free 
compartmentalisation and another on protection against and combating bluetongue were passed by parliament. 
Attention should be paid to fully aligning transmissible spongiform encephalopathies and surveillance systems, 
animal welfare and the trade regime for agricultural products with the acquis. A regulation has also been adopted 
on the minimum rules for the protection of chickens kept for meat production. The administrative capacity of 
official controls for the placing on the market of food, feed and animal by-products has improved. Substantial 
work on animal by-products is still required. Food safety rules on issues such as labelling, additives and purity 
criteria, flavourings, food supplements and enzymes have been aligned with the acquis. Progress on the specific 
rules for feed has been limited. Phytosanitary policy should be further developed. Rules for new foods and for 
GMOs need to be aligned (European Commission, 2019). 

Some  progress  was  made  on  resources  and  fleet  management,  inspection  and  control,  and  on  international 
agreements.  Turkey  should,  in  particular,  adopt  a  fisheries  and  aquaculture  law  aligned  with  the  EU  acquis. 
Institutional capacity has further improved. The new vessel monitoring system monitors sea fishing activities, as 
well as the registry, location, time, speed and destination of the vessels, and of the fishery catch data. Electronic 
logbooks have been implemented with the new system. In terms of inspection and control, some progress has 
made  in  legislative  alignment  on  bluefin  tuna.  Progress  needs  to  be  made  on  market  policy.  The  EU  has 
demanded from Turkey the establishment of sound institutions governed by well-trained staff with rigorously 
tested procedures in connection with the management and implementation of IPARD. TKDK is consequently a 
good candidate for the paying agency, when accession happens (European Commission, 2019). 

Full liberalisation reduces income inequality among farmers, as large and wealthy farmers receive most of the 
gains in producer surplus resulting from current price support. On the other hand, liberalisation leads to a better 
distribution  of  real  income  owing  to  lower  food  prices.  Cakmak  (2004)  indicates  that  Turkey  could  still  be  a 
significant net exporter in agricultural production. With no trade restrictions with the EU, livestock imports will 
increase considerably. Wheat, maize, oilseeds and livestock production will decline, and barley, rice and fruit and 
vegetable production will expand. Industrial crops will most probably remain competitive, and their production 
will also expand. 

Discussion, conclusions and recommendations 

These findings can help in the decision-making process to develop the sector in accordance with development 
plans and strategies, taking into account EU integration. Among the principles for designing and implementing 
the  future  agricultural  policies  are  a  holistic  approach  that  considers  international  agreements,  decoupling 
agricultural payments to farmers, improving the of organisation and strengthening institutional capacity and the 
private sector’s role, considering consumer and farm workers’ health issues, adapting environmentally friendly 
agricultural practices, a participatory approach, a science-oriented approach and promoting young farmers. 

Turkey is an upper-middle-income country and its economy has grown at a rate above the world average, except 
for  that  of  China.  A  number  of  laws  and  regulations  have  been  adopted  related  to  both  national  issues  and 
agriculture, which have accelerated development in all aspects. Laws on agricultural issues have enhanced the 
transformation of the agricultural sector. Special attention has been paid to rural development, but challenges 
still lie ahead. Turkey’s agricultural trade balance has historically been consistently positive. 

128 

 
The importance of agriculture in the overall economy is high in terms of employment and GDP. Agricultural GDP 
per capita is about half the national average. Despite these developments, Turkish agriculture is characterised 
by a large number of small farms, while the number of commercial farms has been increasing over the last 20 
years. 

Turkey’s  climatic  and  geographical  conditions,  such  as  its  good  soil  fertility,  adequate  climate  and  abundant 
rainfall in some regions, allow almost any kind of crops to be grown. Turkey is the world leader in the production 
of hazelnuts, sultanas/raisins, dried figs and dried apricots and is in the top 10 countries in the world in terms of 
most of the products it produces. 

Law  No 6360,  enacted  in  2012,  has  changed  the  Turkish  rural  setting.  The  number  of  villages  and  the  rural 
population has declined dramatically. Approximately 21 % of all households in Turkey are in the rural areas, with 
an average household size of 4.8 persons. All rural areas have access to electricity, drinking water and hygienic 
conditions. 

The objectives of the Turkish agricultural policy have not changed radically over time. The objectives are to meet 
the  country’s  food  security  needs,  to  increase  productivity,  to  improve  self-sufficiency  levels,  to  raise  farm 
incomes, to enhance competitiveness, to develop rural areas and to harmonise the country’s agricultural and 
rural development policies and institutions with those of the EU. 

Regarding  the  key  strategic  documents,  the  agricultural  policy  paper  for  2006–2010  delineates  the  strategic 
objectives,  principles  and  priorities  of  the  agricultural  policies  to  be  implemented.  The  first  national  rural 
development strategy for 2007–2013 was developed to meet the main objective of increasing employment and 
income-generating activities in rural areas. TKDK implements the rural development programmes using EU funds 
under IPARD I and IPARD II. 

The  agricultural  budget  has  increased  over  the  last  10  years  in  nominal  terms,  while  the  proportion  of  the 
agricultural budget in GDP has almost been stable, namely at 0.5–0.6 %. TKDK implemented quite a number of 
projects funded from EU IPARD programmes, the national budget and farmers’ own contributions. 

Turkey  needs  to  adapt  to  the  EU  agricultural  policy  acquis.  There  are  currently  no  cross-compliance  rules  in 
Turkey, and they need to be accepted under the CAP. Turkey has already taken an important step in terms of 
passing the necessary legislation in some areas of agriculture. CATAK has been in place for many years. An IACS 
has developed and put  in place recently. The  FADN  has been integrated into the agricultural production and 
registration  system.  The  agriculture  insurance  law  provided  for  a  comprehensive  and sustainable  agricultural 
insurance  system,  the  agricultural  insurance  pool,  with  the  objective  being  to  provide  income  stability  for 
producers. 

Turkey’s CMO legislation should be developed and aligned with the EU CAP/CMO legislation. There has been 
some progress made in the area of food safety, veterinary and phytosanitary policy. Turkey has been applying 
mass vaccination for foot and mouth disease outbreaks. Some progress has been made in terms of resources and 
fleet  management,  inspection  and  control,  and  international  agreements.  The  Turkish  rural  development 
strategy paper is in line with the EU rural development programme. In the pre-accession period, Turkey plans to 
establish a paying agency and a rural development agency. 

The  current  price  support  favours  large  and  wealthy  farmers.  Empirical  studies  have  indicated  that  full 
liberalisation reduces income inequality among farmers. The full adoption of the EU agricultural policy  acquis 
would have some impact on Turkish agriculture. Turkey would still be a net exporter of agricultural products, but 
some subsectors would decline, while some would increase in importance and be developed. 

References 

Bayaner, A. (2007), ‘Possible  impact of the EU CAP on the sustainability of farming in  Turkey’, in Cristoiu, A., 
Ratinger,  T.  and  Gomez  y  Paloma,  S.  (eds),  Sustainability  of  the  Farming  Systems:  Global  issues,  modelling 
approaches and policy implications, JRC and IPTC. European Communities 

Cakmak, E. H. (2004), Structural Change and Market Opening in Turkish Agriculture, EU Turkey Working Paper, 
Centre for European Policy Studies, Brussels. 

Doğan, T. and ve Yardımcı, B. (2019), Kırsal Kalkınma: Tanım, Temel Meseleler ve Politikalar, Türkiye Kalkınma 
Vakfı, Hermes Basım, Ankara, Turkey. 

129 

 
 
European Commission (2019), Commission Staff Working Document: Turkey 2019 Report, Communication on EU 
Enlargement Policy, SWD(2019) 220 final, European Commission, Brussels. 

Kaul, C. and Hoelgaard, L. (2019), Technical Assistance for Development of a Strategy for Alignment with Common 
Market Organisation (CMO) Requirements, Project document, (EuropeAid/138004/IH/SER/TR) NIRAS IC Sp. z.o.o. 
Unpublished. 

KB (Kalkınma Bakanlığı) (2018), Kırsal Kalkınma Özel İhtisas Komisyonu Raporu., 11. Birinci Kalkınma Planı (2019–
2023) (Development Plan), Ankara, Turkey. 

KKB  (Kredi  Kayıt  Bürosu  Credit  Registry  Office  of  Commercial  Bank)  (2019),  Türkiye  Tarımsal  Görünüm  Saha 
Araştırması 2019  (Field Research on the Turkish Agricultural Outlook).  Research carried out by Tarım Kedileri 
Değerlendirme Sistemi (TARDES) and Frankfurt School of Financial Management. And  
https://www.kkb.com.tr/Resources/ContentFile/2019_KKB_TURKIYE_TARIMSAL_GORUNUM_SAHA_ARA%C5%
9ETIRMASI.pdf (accessed 3 December 2020). 
MoAL (2015), Ulusal Kırsal Kalkınma Stratejisi: 2014–2020 (National Rural Development Strategy of Turkey). 
Prepared by the ministry and can be accessed online 
OECD 
https://www.oecd.org/publications/evaluation-of-agricultural-policy-reforms-in-turkey-9789264113220-
en.htm (accessed 21 December 2020) 

Turkey,  OECD 

Agricultural 

Evaluation 

Publishing. 

Reforms 

(2011), 

Policy 

of 

in 

RG (2006), Tarım Kanunu (Agricultural Law), Official Gazette of the Turkish Republic. (The Law is published in the 
official gazette and can be accessed online) 

TurkStat 
(https://tuikweb.tuik.gov.tr/PreHaberBultenleri.do?id=24869) (accessed on 3 December 2020). 

Structure 

Holding 

Agricultural 

(2018), 

Survey 

‘Farm 

2016, 

Statistics’ 

TurkStat (2020a), ‘Kır/Kent Tanımının Revizyonu’ (www.resmiistatistik.gov.tr/detail/subject/kir-kent-taniminin-
revizyonu/) (accessed 7 June 2020). 

TurkStat (2020b), Compiled by the authors from different tables at www.tuik.gov.tr. 

130 

 
 
 
List of abbreviations 

AFSARD 

Agency for Financial Support of Agriculture and Rural Development 

AL 

APM 

APMC 

ARDP 

ARDPF 

ASBiH 

ASCU 

AWU 

BA 

Albania 

agricultural policy measures 

Agricultural Policy Measures Classification 

agriculture and rural development plan 

agriculture and rural development programme fund 

Agency for Statistics of Bosnia and Herzegovina 

agricultural sales cooperative unions 

annual work unit 

Bosnia and Herzegovina 

BD BiH 

Brčko District of Bosnia and Herzegovina 

BiH 

CAP 

CATAK 

CEFTA 

CMO 

DCM 

EAFRD 

ERP 

FADN 

FAO 

FBiH 

GDP 

GFF 

GIZ 

GMO 

GVA 

ha 

IACS 

ILO 

Bosnia and Herzegovina 

Common Agricultural Policy 

conservation reserve programme 

Central European Free Trade Agreement 

common market organisation 

Decision of the Council of Ministers 

European agricultural fund for rural development 

economic reform programme 

farm accountancy data network 

Food and Agriculture Organization 

Federation of Bosnia and Herzegovina 

gross domestic product 

Grant Fund Facility 

German Development Agency 

genetically modified organism 

gross value added 

hectare 

integrated administration and control system 

International Labour Organization 

INSTAT 

Albanian Institute of Statistics 

IPA 

IPARD 

ISARD 

JRC 

KAS 

LAU 

instrument for pre-accession assistance 

instrument for pre-accession assistance for rural development 

inter-sectoral strategy for agriculture and rural development 

Joint Research Centre 

Kosovo* Agency of Statistics 

local administrative unit 

131 

 
LEADER 

LPIS 

MAFRD 

MAFWE 

liaison  entre  actions  de  développement  de  l’économie  rurale  (links  between  actions  for  the 
development of the rural economy) 

land parcel identification system 

Ministry of Agriculture, Forestry and Rural Development 

Ministry of Agriculture, Forestry and Water Economy 

MAFWM 

Ministry of Agriculture, Forestry and Water Management 

MAP 

MARD 

ME 

MIDAS 

MK 

NRN  

medicinal and aromatic plant 

Ministry of Agriculture and Rural Development 

Montenegro 

Montenegro institutional development and agriculture strengthening 

North Macedonia 

National Rural Network 

Monstat 

Statistical Office of Montenegro 

NARDS 

national agricultural and rural development strategy 

NUTS 

OECD 

PSE 

RoS 

RS 

SAA 

SORS 

SRD 

SWG 

t 

TKDK 

TR 

Nomenclature of Territorial Units for Statistics 

Organisation for Economic Co-operation and Development 

producer support estimate 

Republic of Srpska 

Serbia 

stabilisation and association agreement 

Statistical Office of the Republic of Serbia 

structural and rural development 

Regional Rural Development Standing Working Group 

tonne 

Agriculture and Rural Development Support Institution 

Turkey 

TurkStat 

Turkish Statistical Institute 

UAA 

UNDP 

WB 

WTO 

XK 

utilised agricultural area 

United Nations Development Programme 

Western Balkan 

World Trade Organization 

Kosovo* 

132 

 
 
List of figures 

FIGURE 1. THE PRINCIPLES UNDERLYING THE EU CAP, WHICH ACTS AS A BENCHMARK FOR AGRICULTURAL POLICY IN PRE-ACCESSION 

COUNTRIES.......................................................................................................................................................... 8 

FIGURE 2. GROSS VALUE OF AGRICULTURE VERSUS EMPLOYMENT (LEFT) AND TOTAL LABOUR AND AGRICULTURAL LABOUR 

PRODUCTIVITY (RIGHT) ........................................................................................................................................ 12 
FIGURE 3. AVERAGE WHEAT YIELDS (LEFT) AND MILK YIELDS (RIGHT) .................................................................................... 12 
FIGURE 4. TOTAL TRADE AND AGRI-FOOD TRADE AS A SHARE OF GDP .................................................................................. 15 
FIGURE 5. TOTAL BUDGETARY SUPPORT FOR AGRICULTURE IN TERMS OF GDP, GOVERNMENT SPENDING AND AGRICULTURAL GVA 

(2017–2019) .................................................................................................................................................. 20 
FIGURE 6. TOTAL BUDGETARY SUPPORT FOR AGRICULTURE (MILLION EUR, 2010–2019) ....................................................... 21 
FIGURE 7. TOTAL BUDGETARY SUPPORT PER HECTARE (EUR/HA; LEFT) AND TOTAL BUDGETARY SUPPORT PER CAPITA 

(EUR/INHABITANT; RIGHT) (2017–2019) ............................................................................................................. 22 

FIGURE 8. TOTAL BUDGETARY SUPPORT (% AND MILLION EUR; LEFT) AND RATIO OF MARKET AND DIRECT PRODUCER SUPPORT TO 

STRUCTURAL AND RURAL DEVELOPMENT SUPPORT (RIGHT) (2017–2019) .................................................................... 23 
FIGURE 9. DIRECT PAYMENTS TO PRODUCERS (% AND MILLION EUR, 2017–2019) ................................................................. 25 
FIGURE 10. MEASURES FOR INCREASING COMPETITIVENESS (MILLION EUR AND %, 2017–2019) ............................................ 26 
FIGURE 11. AGRICULTURE’S CONTRIBUTION TO TOTAL GVA AND EMPLOYMENT (%, 2010–2018) ........................................... 33 
FIGURE 12. ECONOMIC GROWTH (% CHANGE IN GDP), INFLATION AND UNEMPLOYMENT RATE (%) (2010–2019) ..................... 33 
FIGURE 13. VALUE ADDED PER WORKER IN THE SECTOR OF AGRICULTURE, FORESTRY AND FISHING (THOUSAND EUR, 2010–2019) 33 
FIGURE 14. AREA OF PRODUCTION FOR CROPS (THOUSAND HECTARES, 2010–2018) ............................................................. 34 
FIGURE 15. FRUIT TREE PRODUCTION (THOUSAND TONNES, 2010–2019) ........................................................................... 34 
FIGURE 16. AGRI-FOOD TRADE PERFORMANCE IN TERMS OF EXPORTS, IMPORTS AND TRADE BALANCE (MILLION EUR) .................. 35 
FIGURE 17. SHARE OF RURAL POPULATION BY REGIONS IN ALBANIA (URBAN–RURAL TYPOLOGY, NUTS LEVEL 3 REGIONS) ............. 36 
FIGURE 18. LEVEL OF BUDGETARY SUPPORT FOR THE AGRI-FOOD SECTOR  IN ALBANIA DURING THE PERIOD 2010–2019 ............... 38 
FIGURE 19. COMPOSITION OF BUDGETARY SUPPORT FOR THE AGRI-FOOD SECTOR  IN ALBANIA DURING THE PERIOD 2010–2019 ... 38 
FIGURE 20. MARKET AND DIRECT PRODUCER SUPPORT IN ALBANIA DURING THE PERIOD 2010–2019 ....................................... 39 
FIGURE 21. BUDGETARY SUPPORT FOR STRUCTURAL AND RURAL DEVELOPMENT DURING THE PERIOD 2010–2019 ...................... 40 
FIGURE 22. BREAKDOWN OF OTHER MEASURES RELATED TO AGRICULTURE IN ALBANIA DURING THE PERIOD 2010–2019 ............. 41 
FIGURE 23. TREND IN THE PROPORTION OF ARABLE LAND THAT IS CULTIVATED IN THE BIH ENTITIES AND BD BIH (%, 2010–2018) 49 
FIGURE 24. CROP PRODUCTION IN BIH (THOUSAND TONNES, 2010–2019) ......................................................................... 50 
FIGURE 25. HERD SIZE OF MAIN LIVESTOCK IN BIH (THOUSAND HEADS AND POULTRY IN MILLION HEADS, 2010–2019) ................ 50 
FIGURE 26. STRUCTURE OF ORGANIC CROP PRODUCTION IN BIH (HECTARES, 2017) ............................................................... 51 
FIGURE 27. AGRI-FOOD TRADE OF BIH (MILLION EUR, 2010–2019) ................................................................................. 51 
FIGURE 28. REGIONAL BREAKDOWN OF THE AGRI-FOOD TRADE IN BIH (%,, 2010–2019) ...................................................... 52 
FIGURE 29. RURAL AND URBAN AREAS OF BIH AT THE LOCAL LEVEL ...................................................................................... 54 
FIGURE 30. STRUCTURE OF DIRECT PRODUCER SUPPORT MEASURES IN BIH (%) ..................................................................... 57 
FIGURE 31. PROPORTION OF STRUCTURAL AND RURAL DEVELOPMENT MEASURES IN BIH (%) ................................................... 59 
FIGURE 32. PROPORTION OF OTHER MEASURES RELATED TO AGRICULTURE IN BIH (%) ............................................................ 60 
FIGURE 33. TOTAL BUDGETARY SUPPORT FOR AGRICULTURE (2011–2019).......................................................................... 70 
FIGURE 34. MARKET AND DIRECT SUPPORT MEASURES ...................................................................................................... 71 
FIGURE 35. STRUCTURAL AND RURAL DEVELOPMENT MEASURES (2011–2019) .................................................................... 71 
FIGURE 36. OTHER MEASURES RELATED TO AGRICULTURE (2011–2019) ............................................................................. 72 
FIGURE 37. TOTAL EXCHANGE OF AGRICULTURAL PRODUCTS (MILLION EUR) ......................................................................... 76 
FIGURE 38. TOTAL BUDGETARY SUPPORT TO AGRICULTURE (2010–2019) ........................................................................... 81 
FIGURE 39. MARKET AND DIRECT SUPPORT MEASURES (2010–2019) ................................................................................. 81 
FIGURE 40. STRUCTURAL AND RURAL DEVELOPMENT MEASURES (2010–2019) .................................................................... 82 
FIGURE 41. OTHER MEASURES RELATED TO AGRICULTURE (2010–2019) ............................................................................. 82 
FIGURE 42. REGIONAL BREAKDOWN OF AGRI-FOOD TRADE IN NORTH MACEDONIA (%, 2010–2019) ....................................... 89 
FIGURE 43. NUMBER OF AGRICULTURAL HOLDINGS BY FARM SIZE (HA) ................................................................................. 89 
FIGURE 44. NUMBER OF AGRICULTURAL HOLDINGS WITH LIVESTOCK (NUMBER OF LIVESTOCK UNITS) ......................................... 90 
FIGURE 45. OUTPUT PRICE INDICES (2015=100) ............................................................................................................ 91 
FIGURE 46. INPUT PRICE INDICES (2015=100) ............................................................................................................... 91 
FIGURE 47. TOTAL BUDGETARY SUPPORT FOR AGRICULTURE (2010–2019).......................................................................... 97 
FIGURE 48. MARKET AND DIRECT PRODUCER SUPPORT MEASURES (2010–2019).................................................................. 97 
FIGURE 49. DIRECT PRODUCER SUPPORT MEASURES (2010–2019) .................................................................................... 98 
FIGURE 50. DIRECT PRODUCER SUPPORT MEASURES BY SUBSECTOR (2010–2019) ................................................................ 98 

133 

 
FIGURE 51. STRUCTURAL AND RURAL DEVELOPMENT MEASURES (2010–2019) .................................................................... 99 
FIGURE 52. OTHER MEASURES RELATED TO AGRICULTURE (2010–2019) ........................................................................... 100 
FIGURE 53. TOTAL BUDGETARY SUPPORT TO AGRICULTURE (2010–2019) ......................................................................... 110 
FIGURE 54. MARKET AND DIRECT PRODUCERS SUPPORT MEASURES (2010–2019) .............................................................. 110 
FIGURE 55. DIRECT PRODUCER SUPPORT MEASURES (2010–2019) .................................................................................. 111 
FIGURE 56. STRUCTURAL AND RURAL DEVELOPMENT MEASURES (2010–2019) .................................................................. 112 
FIGURE 57. OTHER MEASURES RELATED TO AGRICULTURE (2010–2019) ........................................................................... 112 
FIGURE 58. TOTAL BUDGETARY SUPPORT TO AGRICULTURE (2010–2019) ......................................................................... 124 
FIGURE 59. MARKET AND DIRECT PRODUCER SUPPORT MEASURES (2010–2019)................................................................ 124 
FIGURE 60. STRUCTURAL AND RURAL DEVELOPMENT MEASURES (2010–2019) .................................................................. 124 
FIGURE 61. OTHER MEASURES RELATED TO AGRICULTURE (2010–2019) ........................................................................... 125 

134 

 
 
List of tables 

TABLE 1. SOCIOECONOMIC CONTEXT INDICATORS ............................................................................................................. 10 
TABLE 2. SECTORAL INDICATORS – GROSS AGRICULTURAL OUTPUT AND EMPLOYMENT ............................................................. 11 
TABLE 3. SECTORAL INDICATORS – AGRICULTURAL LAND AND YIELDS (THOUSAND HECTARES, 2017–2019) ................................ 13 
TABLE 4. TRADE IN FOOD AND AGRICULTURAL PRODUCTS ................................................................................................... 14 
TABLE 5. ASSESSMENT OF RURAL AREAS’ DATA AVAILABILITY (2010–2019) ......................................................................... 15 
TABLE 6. PROGRESS OF THE WB COUNTRIES/TERRITORIES AND TURKEY BY ACQUIS CHAPTERS IN 2018 AND 2019 ....................... 18 
TABLE 7. IPARD II PAYMENTS IN CANDIDATE COUNTRIES (MILLION EUR, UNLESS OTHERWISE STATED) ...................................... 24 
TABLE 8. SUPPORT FOR ENVIRONMENTAL AND SOCIETAL BENEFITS ....................................................................................... 27 
TABLE 9. SUPPORT FOR THE RURAL ECONOMY AND POPULATION ......................................................................................... 28 
TABLE 10. HERD SIZE (IN THOUSANDS) OF LIVESTOCK SUBSECTORS BY YEAR (2010–2019) ...................................................... 35 
TABLE 11. AGRICULTURE AND RURAL DEVELOPMENT PROGRAM SECTORS AND PRODUCTS SUPPORTED DURING THE PERIOD 2017–

2019 .............................................................................................................................................................. 41 
TABLE 12. KEY GENERAL STATISTICS OF BIH (2010–2019) ............................................................................................... 47 
TABLE 13. KEY AGRICULTURAL STATISTICS OF BIH (2010–2019) ....................................................................................... 48 
TABLE 14. NUMBER AND SIZE OF AGRICULTURAL HOLDINGS IN BIH REGISTERED IN THE FARM REGISTER ...................................... 49 
TABLE 15. AVERAGE YIELDS IN AGRICULTURAL PRODUCTION IN BIH (T/HA) ........................................................................... 50 
TABLE 16. KEY AGRICULTURAL STATISTICS OF KOSOVO* (2010–2019) ............................................................................... 66 
TABLE 17. LABOUR FORCE STRUCTURE ........................................................................................................................... 67 
TABLE 18. MAIN SOURCES OF HOUSEHOLD INCOME IN KOSOVO* (%) .................................................................................. 68 
TABLE 19. POPULATION OF MONTENEGRO, TOTAL AND BY REGIONS (2003 AND 2011).......................................................... 77 
TABLE 20. MACROECONOMIC INDICATORS ..................................................................................................................... 87 
TABLE 21. KEY AGRICULTURAL STATISTICS ....................................................................................................................... 88 
TABLE 22. MIGRATION STATISTICS (2010–2019, THOUSAND PERSONS) .............................................................................. 92 
TABLE 23. ACTIVE AND NON-ACTIVE LABOUR POPULATION BY AGE (2017–2019) ................................................................. 92 

135 

 
 
 
 
GETTING IN TOUCH WITH THE EU 

In person 

All over the EU there are hundreds of Europe Direct information centres. You can find the address of the centre nearest you at: 
https://europa.eu/european-union/contact_en 

On the phone or by email 

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FINDING INFORMATION ABOUT THE EU 

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Europe Direct or your local information centre (see https://europa.eu/european-union/contact_en). 

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ISBN 978-92-76-37270-7