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Siemen van Berkum (LEI) and Natalija Bogdanov ( UoB )

Serbia on the road to EU accession. Implications for agricultural policy and the agri -food chain. Siemen van Berkum (LEI) and Natalija Bogdanov ( UoB ) Presentation at the Novi Sad Fair, Novi Sad, 16 May 2012. Setting the stage. Serbia’s income pc is far below EU average

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Siemen van Berkum (LEI) and Natalija Bogdanov ( UoB )

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  1. Serbia on the road to EU accession. Implications for agricultural policy and the agri-food chain Siemen van Berkum (LEI) and Natalija Bogdanov (UoB) Presentation at the Novi Sad Fair, Novi Sad, 16 May 2012

  2. Setting the stage • Serbia’s income pc is far below EU average • Regional income inequality is significant • Almost a quarter of the labour force in agriculture • Agriculture predominant activity in most rural areas

  3. Agricultural sector characteristics • Agriculture characterised by small farm units, low productivity and low incomes - 65% of farms are subsistence farms and not integrated in the chain • Larger structures in Northern plain regions, with modern, commercial farming • Dual structure in agro-processing • Ag. production dominated by arable farming • Exports of cereals, sugar, vegetable oils and fruits – to EU and neighbouring countries

  4. Institutions and agricultural policies • Legal and institutional reform are proceeding but important legislation not yet fully implemented while institution building falls short of adequate human resources • Annual budget fluctuations in terms of amount and measure reflect inconsistencies in agricultural and rural policy implementation • Main support instruments are direct income payments, import tariffs and interest rate subsidies

  5. Implications of EU integration (1) • Budgetary consequences (assuming accession in 5-7 year): • a net-transfer of € 1.1(with phasing-in DPs) to1.67 (without phasing-in DPs) bnto Serbia • Serbia eligible for close to €1 bn from Structural Funds • Transfer implies 1.4% of CAP budget and 2% of Structural Fund assistance • Transfer implies 2.6-3.7% of Serbia’s GDP • Transfer of income from EU27 to Serbia has a minor effect on EU’s economic growth rates

  6. Implications of EU integration (2) • Increased policy predictability and budget stability over longer period • Enhanced transparency of the policy - transparent rules, procedures, eligibility criteria for potential beneficiaries • More efficient mechanisms for market and income stability. More active land and labor market, financial capital and information flow. • Compliance with highest standards of food safety and quality – benefits consumers

  7. Implications of EU integration (3) • Rising importance of the environmental and natural resources protection. • But… some threats exist – with possibly huge social consequences: • risk of increasing (already high) regional disparities • uncertain position of the large number of small farms – opportunities to generating external or on-farm income become increasingly important • closure of small businesses that are unable to meet standards and other market requirements

  8. Challenges ahead (1) • Adoption and implementation of acquiscommunautaire requires accelerating: • legal and institutional reform on food safety, land ownership, cooperatives, advisory services, etc • Enhancing human resources for institutional reform • Align with agricultural policy to CAP • In a managed process of introducing measures, allowing time to the agrifood sector to adapt • Need for monitoring and information system + analytical capacity to evaluate policy impacts

  9. Challenges ahead (2) • Implement effective rural development policies supporting agri-food restructuring and enhancing employment opportunities in rural areas • Provide public services that help agri-food chain to prepare for EU membership • Extension, education and research, market information • Consistently implement strategy towards accession • trust and reliability is a pre-condition for investors

  10. Calculation of support • National envelop: € 760 mln/year (or 204/ha) • Average 2007-2009 production/ha and EU-15 premium per tonne = dp/ha for cereals (260), oilseeds (144) and protein crops (165) • EU15 premium in livestock, wine and small products • Rural development (Pillar 2): € 386 mln/year (based on ratio Pillar1/Pillar2 in Bulgaria and Rumania) • Structural funds: criteria GDP<75% EU average, max.4% of GDP. Bulgaria has similar GDP – € 979 mln

  11. Summary budgetary transfers arising from Serbia’s accession

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