Seeds of change planted in Serbian Agriculture

A fifth of the Serbian working population is employed in agriculture and has been so for generations. But with EU integration and the ever present global competition, the farmers of the future will face challenges. Euroviews digs in.

Milan Šuša is a proud farmer. His success for growing is simple: “"little, by little, by little. The first year I bought a little bit of land, then a little bit more, and so on,” he explains.
Milan Šuša is a proud farmer. His success for growing is simple: “”little, by little, by little. The first year I bought a little bit of land, then a little bit more, and so on,” he explains. Photo: Jack Cairns

Belgrade & Gakovo, Serbia – “We are not afraid of competition. We make good products here in Serbia,” he says, standing next to a large tractor in the middle of a vast farmland, where a large chunk of the fields are his to harvest. His name is Milan Šuša, and he’s one of the few successful Serbian farmers in a country with more than 1.4 million working in agriculture.

Milan Šuša took over a small piece of land from his father, and is likely to leave a much larger piece of land to his son.

As of right now, Nikola Šuša, Milan’s 18 year old son, studying at the Agricultural University in Novi Sad, is set to inherit 30 hectares of land, with his father renting an additional 170 hectares. Even without accounting for the leased land, the Šuša Farm, is larger than the EU average at 14.5 hectares.

In that sense, Nikola’s prospects for a future career in agriculture appear to be good, but the Šuša farm is different from the vast majority of Serbian farms.

The Serbian Agricultural sector is a longtime giant, that’s somewhat stumbling in modern times. With an average farm size of 5,4 hectares, it is, according to Natalija Bogdanov, a professor at the University of Belgrade, and an expert in EU integration in Agriculture, too disintegrated to be effective.

“The general reason is that Serbia experiences slow progress in reforming other sectors. The problem is, that there are few employment opportunities outside of agriculture, and that means people remain on their small farms in order to ensure food security and reduce expenditures for food and earn some additional income. It slows down the process of concentrating agriculture into larger farms, because it makes the land market inactive. That is why, the bigger producers do not have the opportunity to expand and become more efficient,” she says.

A proud grandfather to Nikola, Ilija Šuša, age 73, remembers the old days in Serbian Agriculture. He, himself, used to work a small piece of land, that Milan then took over and expanded. In his time, Ilija worked part time in the field, and part time at a local factory.
A proud grandfather to Nikola and father to Milan, Ilija Šuša, age 73, remembers the old days in Serbian Agriculture. He, himself, used to work a small piece of land, that Milan then took over and expanded. In his time, Ilija worked part time in the field, and part time at a local factory. Photo: Jack Cairns

EU Integration dominating Serbia
Agriculture is only one of many sectors in Serbia where they feel the influence from the European Union. According to Miloš Erić, a Serbian economist specializing in EU integration at University Singidunum, Belgrade, the Serbian economy is one that’s strongly connected to already agreed upon trade deals with the EU:

“All the economic sectors are functioning pretty well in relation to trade with the EU. We have gotten furthest in the sense of openings up markets, movements of good and movements of capital,” he says.

But the EU is not only visible in the economic sector. According to Mr. Erić, all laws currently passed in Serbia will have to be compatible with EU legislation in order to secure a smoother transition when Serbia starts discussing the specifics of an EU-membership.

At present they have started formal negotiations, but they still need to open up the first acquis, or chapter, of the official 35 part plan Serbia will have to follow before joining the union.

At a visit to Belgrade at the end of March, Federica Mogherini, EU Commissioner and High Representative for Foreign Affairs  told Serbia, that the EU is “ready for the first negotiating chapters to be opened this year.”

According to Mr. Erić, those chapters expected to be opened first are the chapters on things like fundamental rights and justice. But completing the agricultural negotiations is one of the bigger hurdles:

“Around 20 percent of Serbia’s GDP comes from agriculture and when it’s going to be opened, those negotiations will not be easy. The main reason is that the subsidies that will be awarded to the Serbian farmers will be on the table in the talks, and that’s naturally a very important issue. But there is no talk of opening them right now,” he explains.

Agri-food trade for Serbia:
Agrofood
While Serbia’s overall trade balance with the outside world is negative, Agriculture yields a surplus. Around fifty percent of both import and export is trade with the EU. Source: Food and Agriculture Organisation of the UN.

For a young European, president of the European Movement’s Serbian youth forum, Gavrilo Nikolić,  Ms. Mogherini’s message was one he has heard before. According to him, beginning the formal negotiations, is an important step for Serbia, but talking about it, is getting old:

Cavrilo Nikolić, from the European Movements Serbian Youth Forum, believes agriculture to be a potential motor for Serbia: “we need to concentrate, not just on integaration, but overall development. We should think and concentrate on how agriculture can help us advance. Use our land’s rich resources to prosper,” he says.
Cavrilo Nikolić, from the European Movements Serbian Youth Forum, believes agriculture to be a potential motor for Serbia: “we need to concentrate, not just on integration, but overall development. We should think and concentrate on how agriculture can help us advance. Use our land’s rich resources to prosper,” he says. 

“To be honest, I think that besides the announcements, there should really be something about actually starting negotiations. We are just prolonging the situation that has been ongoing for the last three years,” he says.

Europe in Serbian farming
While the trade agreements has brought a large market for Serbian farms, and the export of agricultural products to the EU currently consists of 50 percent of their total with another 41 percent going to neighboring countries also hoping for a future membership, it has also brought the challenge of liberalisation and competition from EU producers.

“We opened up our markets to early,” Natalija Bogdanov explains and continues:

“The problem is that it wasn’t necessary and we weren’t expected or pushed to liberalize markets that early. Our ministry and government weren’t during enough to strengthen the sector to cope with it. Support to agriculture and food industry in Serbia was insufficient, unstable and not enough has been done to integrate stakeholders in food chain, and many institutional slow comings, so It happened too early and without proper reason for speeding it through,” she says in reference to a 2008 agreement, that greatly enhanced the free trade between Serbia and EU.

Those worries of opening up the markets too early, is shared by some of the agricultural students in Serbia. Marko Zivkovic, the president of Serbia’s branch of International Association of Students in Agricultural and Related Sciences [IAAS], who is himself studying agricultural economics in Serbia, believes the EU integration and liberalisation is harmful to the prospects of Serbian agriculture:

“We experience the big western companies coming in from the EU and other countries and setting terms through the EU. I fear the EU integration is giving them much too many advantages,” he says, and explains that while he himself, as an agricultural economist, may benefit from European money, he fears it’s going to be hard on the many regular farmers in Serbia.

According to Marko, the small farmers in Serbia needs to organise better, either in large agricultural associations, which are currently almost nonexistent and lack power to lobby for farmers interests, or in cooperatives, in order to be able to compete. The need for further cooperation is something, Professor Bogdanov agrees with:

“Due to the lack of cooperatives and organisations, the small farms have bad access to the market, to new technology and financial markets. That’s why they can’t compete. There is not sufficient support for those who are interested in improving their productivity,” she says and continues:

“Roughly fifty percent of all farms in Serbia are not registered. That means they aren’t in the farm register, which means that they don’t have the right to state support,” she says and explains, that small farmers sell their products on a “green market”, that barely supports the livelihood for one family, and does little to create a greater agricultural output in Serbia.

Miloš Erić agrees that many farmers are struggling and will face more problems in the future, but he doesn’t believe that EU is to blame:

“The danger for these farmers doesn’t only come from the EU, it also comes from major Serbian farming companies inside the country. in agriculture you need to be efficient in order to be successful,” he says and adds, that he too believes that the formation of cooperatives would be one way to cope with the competition:

“However, here it’s considered to be something from the socialist or the communist area. Unfortunately cooperatives are viewed in a negative light. It’s considered something that belongs in the past,” he says

Future farming will take more
While Natalija Bogdanov sees significant challenges, when it comes to the future for Serbian agriculture, in a closer relationship with EU, she is optimistic for, what you might refer to as “the best and the brightest”:

“The big and good farms, mainly located in the north, have well established connections with the market and are improving their standards, using more mechanisation and they can compete in an international environment,” she says and adds, that there are relatively small numbers of big farms in Serbia, that are likely to do well:

“They will use the opportunity of the international market and liberalisation, and they will use the opportunity of the internationationalization because their production is effective and able to compete, both in terms of price and quality.”

The importance of mechanisation and effectiveness is not lost on Nikola Šuša, the son of Milan, and the likely successor of his farm. As a young Serb with ambitions in agriculture, he’s studying agricultural engineering, and Euroviews meet up with him, on his trip back to his family’s farm from the larger city of Novi Sad, where he just finished an exam:

Milan Šuša shows his biggest machine, a combine harvester. It’s originally from 1995 and he purchased it for 60.000 Euros.
Milan Šuša shows his biggest machine, a combine harvester. It’s originally from 1995 and he purchased it for 60.000 Euros. Photo: Jack Cairns

“In the future you are going to need education in the sector. In order to be a successful farmer you need to know how to use computers and machines,” he says, and explains, that he himself has ambitions to make the Šuša farm even more technologically advanced.

And that he will need the knowledge is obvious to anyone who visits the Šuša farm. Milan Šuša proudly explains how they already use GPS to monitor their fields, computers to analyze where to fertilize and machines to do the heavy lifting.

“We use the same technologies and machines as they use in the EU,” he explains.

Reforms needed
Despite Mr Šuša being a successful farmer, he still encounters problems, and he is not happy with the agricultural system as a whole in Serbia. While he owns a large piece of land, and leases a larger piece, he feels the government is giving unfair advantages to large foreign corporations:

“I can only lease farmland for three years, but the big Arab companies coming in, can lease it for 100 years,” he explains with a frustration, that stems from the fact, that the Serbian government still owns roughly ten percent of the farmland in Serbia, and according to him, not renting it out in a proper and fair way.

The oldest member of the Šuša family looks at the farms two employees doing their job. The Šuša farm is almost neighboring Hungary and the European Union, which can be seen in the Horizon.
The oldest member of the Šuša family looks at the farms two employees doing their job. The Šuša farm is almost neighboring Hungary and the European Union, which can be seen in the Horizon. Photo: Jack Cairns

Milan prefers to buy land rather than leasing, but so far the government has not been willing to sell it to him. Instead he grows his farm “one hectare at a time”, but he insists that he would very much like to buy land, rather than renting it short-term.

And that hope may be harder to achieve in the future, Professor Bogdanov explains. While foreigners as of right now are not allowed to buy any agricultural land in Serbia, at it shouldn’t be possible to rent land for a hundred years neither, it’s set to change next year:

“Serbia signed a stupid agreement [with the EU], that from next year means, foreign citizens will be able to buy land in Serbia, regardless of the fact that Serbia is not an EU member! Why our politicians did it? To express good will and willingness to become a member state,” she says and explains why that is likely to cause issues:

“Without a single cent of direct assistance to Serbian farmers from EU funds so far, we serve up on a silver platter the most important resources – agricultural land and the food market of 7,5 million people.”

European Money

While the successful Serbian farmer feels, that he can compete with the EU products, the situation is different with the CAP. The Serbian wages being lower and the land being cheaper, makes Mr. Šuša competitive, but according to both him, professor Bogdanov and Mr. Eric, the support could be used better.

At present the Serbian Government gives out agricultural support, that’s worth a little under a fifth of the support in the EU, but they are also eligible for EU support through the Instrument for Pre-Accession Assistance in Rural Development [IPARD]

Serbia's IPARD
Serbian agriculture is is granted 175 million euros  from the EU over the coming five years to support it. Besides farm investment, the money will go to areas such as organic production, rural economy and  and stengthening the food chain. However, the money are yet to start flowing, due to the lack of an accredited paying agency in Serbia.

But the IPARD is only a part of what the EU contributes to prepare for Serbia’s accession. In total they are supporting €1,5 billion between 2014-220, and it is not only intended for Agriculture. It will be split into many different areas, such as investments in education, infrastructure and the rule of law.

Mr. Erić believes that while the financial help is significant, it’s more about using the funds as a “waiting room” for a future inside the European Union. He explains, that the IPA, which is less than ten percent of the likely funding as an EU member, is created to allow countries to catch up with the EU countries, but:

“If you get support, that’s only ten percent compared to what you would get as a member, then it’s obviously not enough to catch up,” he says, and explains, that the main benefit of the IPA, is the fact, that the money are given based on the same rules as future EU-funds, if Serbia becomes a member.

“The IPA, based on a project-logic, actually requires you to make a feasible project, find partners and so on before you can get any funding. Therefore I think it’s very beneficial, because it prepares the municipalities, regions and businesses to a future EU-membership,” he says.

The Youth and the EU membership
Whether or not Serbia’s path to EU accession is a given good, is still debated. One of the voices speaking for it to be a good thing, is Gavrilo Nikolić, who however feels, that the EU could do more to show the Serbs the prospects of an EU membership:

“The EU needs to show the Serbian youth, that they want us to join,” he says and continues:

“it is important because the EU isn’t working very much with the youth. They are working with government officials, but not the youth. And the youth is going to be the ones to vote in a future referendum,” he says

If that referendum was to happen, and the Serbian Agricultural was to be integrated completely in the EU, Milan and Nikola, and their farm in Gakovo is ready for the competition. But asked whether he wants Serbia to join EU, Nikola, eighteen years old and studying agriculture, expresses the general mood amongst the Serbian youth.

“I don’t know,” he ends.

Nikola is set on returning to his father’s land, and take it to the next level. What that level will be, he is unsure of, but he would like to use his degree and work with machines.
Nikola is set on returning to his father’s land, and take it to the next level. What that level will be, he is unsure of, but he would like to use his degree and work with machines. Photo: Jack Cairns