1. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Goran Živkov "Agrarian Policy reform in Serbia" Where should the money go? Session: Integration of Western Balkans agricultural markets into EU markets

2. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 5.7 million ha Agricultural land: 5.7 million ha 4.2 million ha Arable land: 4.2 million ha 90% of land in private ownership 0.7 million farms (0.4) Around 0.7 million farms (0.4) Average size of farm: 3 ha (10.6) 14 % of GDP Primary production from agriculture, hunting and forestry accounted for 14 % of GDP Exports of primary agricultural products account for 26 % of total exports Agricultural indicators Still too important

3. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Land owned ha Land owned % Cows owned Cows owned % Number of farms Agriculture householdsless than 1 ha4%1-36%200,000 Small holdings1- 5 ha35%3-541%400,000 Private farmsmore then 5 ha46%more then 1044%100,000 CooperativeAv. 4005%501%510 KombinatsAv. 70010%1008%549 Important in terms of household food & income security, so ensure continued access to inputs, but exclude from commercial policy Encourage switch to high- value crops &/or expansion to private farms, with some reducing to ag. households Ensure further development and enlargement Establishment of democratic structure, transformation to modern cooperatives or other structures Privatisation and restructuring Farm resources Many part-time farmers

4. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Rural areas in Western Balkan Rural areas in Western Balkan The Western Balkans today = Western Europe in the 19XXs? Household structure (strong family; multi- generational living) Limited mobility (“my” village) Farm structures (small; between self- sufficiency and the market) “Rural” ≈ “Agricultural” Post-war reconstruction Rapid social change just round the corner

5. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 What is the most appropriate agrarian policy for WB condition? To follow the today CAP policy To follow the today CAP policy To follow the CAP policy of 70’s To follow the CAP policy of 70’s Not to follow CAP policy at all Not to follow CAP policy at all

6. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 EU Western Balkans Supply side Agriculture sector as a spending part of economy (large support from taxpayers & consumers to meet environmental & social goals) Strong urban economy that can contribute to RD - Possibility to have significant contribution to Ag & RD Well defined regions Well developed local groups and decentralisation Expectation that agriculture will contribute to the overall economy – earning part of economy Undeveloped other sectors Demand side Relatively well developed rural infrastructure Long pattern of focussing attention on urban development Is EU agricultural & RD policy suitable for Western Balkan

7. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Economic Social Environmental EU (WB) strategy objectives

8. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Economic Social Environmental Majority of GDP is non- agricultural (>90% in EU-15) Long history of productivity- increasing investments in agriculture (EU-15) Basic economic infrastructure established Agriculture still a major contributor to GDP Still big scope for investment to increase agricultural productivity Economic transition still ongoing EUWestern Balkans

9. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Social Environmental Economic Agricultural already a minority employer, even in rural areas, so social needs have to be met through other means Well developed social safety nets Agricultural restructuring will have big social effects Pension & benefit levels failing to keep pace with inflation EUWestern Balkans

10. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Environmental Social Economic Many habitats & features already lost through agricultural intensification Many large livestock farms = point sources of pollution Well-developed regulatory systems High public priority for the environment Wealthy economies prepared to spend on the environments Fragmented landscape and low- intensity farming Relatively few large livestock units (only ex-state farms) Poor regulatory systems & farmer awareness Public concern for the environment only just developing Low-income economies with urgent pressure for economic growth EUWestern Balkans

11. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Production increase Competitiveness increase Sustainable agriculture Where should the money go? Pillar 1 vs. Pillar 2

12. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Axis 1 Axis 2 Axis 3 WB: Investment in primary production can still yield big returns; investment in marketing & processing even more so EU: re-creation of habitats & features lost during intensification WB: preservation of habitats & features not yet lost WB: Poor rural infrastructure and service But similar needs in urban areas create great competition for limited funds Competitiveness Environment Infrastructure EU ** WB***** EU ***** WB** EU ** WB*****

13. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 The overall balance 1950s/60s EEC agricultural policy envisaged 50% “Guarantee” & 50% “Guidance” BUT market support took increasingly large slices of the cake – leaving “rural development" with as little as 5% of total funding Reforms from the 1990s onwards began to redress the balance Political pressures make it very hard to take money away from established Pillar 1 recipients (i.e. farmers), despite widespread public interest in Pillar 2

14. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Economic Social Environmental EU (WB) strategy objectives

15. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Economic Social Environmental EU (WB) strategy objectives Political

16. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Can the Western Balkans take a more direct route to where the EU is heading, by spending more on Pillar 2 now and avoiding building up a larger Pillar 1? Serbia did

17. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Approach

18. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Objective type Overall objectiveShort titleEconomic effect Economic Increase the wealth of the nation through an efficient agricultural sector, producing products that are internationally competitive in terms of quality and price. Wealth creation Earning Social Ensure that the food provided to Serbian consumers meets acceptable standards of quality and safety Food safetySpending Social Support the standard of living of people currently dependent on agriculture, where this is liable to seriously decline through economic reform Income support Spending SocialSupport the sustainable development of rural areas. Rural development Earning & Spending Environ- mental Safeguard the natural environment from detrimental effects of agricultural production or restructuring Environmenta l protection Spending Political Prepare Serbia's agricultural sector for accession to the EU EU accessionComplex Political Prepare Serbia's agricultural trade & support policies for accession to the WTO WTO accession Complex Main Strategy Objectives

19. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Agrarian budget 2000-2006 (million dinars) (25 bn dinars = 270 million euros in 2006)

20. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 2005 … +1…..______________n_______________….-1…..EU Modernization of agriculture and adjustment to the WTO & EU Budget goals

21. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Support structure

22. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Pillar 1 Pillar 2 EUSerbia Investment support in production & marketing Rural infrastructure

23. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Results

24. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Production Index 2000 – 2005 (previous year 100)

25. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Production Trends 2000 – 2005

26. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Agricultural product trade (mil USD)

27. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Agricultural Products Trade with EU (mil USD)

28. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Level of investment… Implemented projects through RD scheme In 2004 – 196 In 2005 – 553 In 2006 - more then 4.000 –700 dairy, pig, sheep & poultry farms –8 ULO cold storage –80 fruit and vegetable storage –More then 70 grain & feed storage –More then 800 infrastructural project –Equipment & mechanization –More then 100 projects for rural diversification –and other …further competitiveness improvement

29. Ninth CEI Summit Economic Forum Tirana, Albania / 22-23 November 2006 Hvala Thank you