The Serbian government has allocated a record 149.5 billion dinars for agriculture this year, which represents 7.5% of the total national budget. Experts agree that this is the largest amount ever dedicated to domestic agriculture. However, they warn that, according to the plan, most of the funds will be used to address urgent issues and help producers overcome the crisis caused by several difficult years, during which climate change severely impacted food production.
Experts unanimously agree that the 149.5 billion dinar agricultural budget is historic. However, many view it as a crisis budget, as it is a result of extremely poor performance in domestic agriculture over the past few years. These issues include the decline in livestock numbers, the shrinking agricultural land base, and low purchase prices for agricultural products. “In a short time, we went from a country that could feed half of Europe to one that imports milk, meat, processed products and even live cattle and baked goods. I think that’s why the government decided, as they say, to loosen the purse strings and give more attention and more money to agriculture,” says Žarko Galetin, an agro-economic analyst.
The agriculture budget is divided into five segments: direct payments, rural development measures, credit support, special and IPARD incentives. A staggering 80% of the budget is dedicated to direct payments.
“These are measures to extinguish the acute fire. They aim to help farmers reduce their production costs. On one hand, we have efforts to increase production capacity, reflected in payments per hectare, and on the other, there are measures to reduce production costs, such as fuel subsidies and certified seeds. When 80% of the budget is directed to direct payments, something had to give. Clearly, the part of the budget meant for developmental initiatives was compromised,” explains our source.
Although experts argue that agricultural development requires different budget investments, they agree that the current plan for expenditure is justified. Farmers must be helped to overcome problems primarily caused by climate change. “In 2024 alone, we had over 40 tropical days with almost no rainfall for extended periods. Under these circumstances, with a significant drop in production and an unfavorable market with low product prices, it is clear that our farmers are in serious trouble trying to renew production. This move is forced, but necessary to relieve farmers,” Galetin explains.
The largest portion of the agricultural budget is allocated for direct payments. Professor Žaklina Stojanović from the Faculty of Economics explains that this year’s budget primarily focuses on direct incentives, while the share for rural development in the total funds has been decreasing over the years. Significant funds are allocated for seed and fuel purchases, milk premiums, payments per hectare, and livestock.
“The impression is that the budget was shaped based on farmers’ demands expressed through protests in 2024. What needs to be understood is that farmers are looking for stability and care for their business in difficult, crisis situations,” says Professor Stojanović, Dean of the Faculty of Economics in Belgrade.
“The current state of our agriculture is a result of both general neglect and lack of care over the past decades, as well as problematic decisions made during the pandemic and the global food crisis triggered by the war in Ukraine, alongside the increasingly adverse impact of climate change,” she adds.
She believes that solving these challenges requires stronger technological innovation and functional connections, such as cooperation or contracting production, including marketing contracts executed on the stock exchange. “Agricultural budget money should be directed toward users who can improve their production, produce more food, and do so more productively and efficiently than before. This is the condition for everything – food should be available at lower prices for consumers to create room for faster economic growth and development. Otherwise, due to the high share of food costs in the overall consumption structure of an average household in Serbia, agriculture with its current performance becomes a burden, limiting growth in other market sectors,” Stojanović notes.
Despite subsidies, food prices continue to rise, and imports increase. Experts warn that the most important thing is for the budget money to reach farmers at the right time. “Subsidies must help farmers. They must get into the right hands at the right time. Public calls must be announced on time, and the speed of subsidy payments is crucial. Farmers need money for fuel, seeds, and fertilizers before spring planting. Controls are also very important to prevent those who have illegally claimed funds in the past,” says Kosta Rajević, a commentator for the agricultural newspaper “Poljoprivrednik.”
Farmers should use the funds they receive from the government to secure better production conditions and make new investments. This would positively impact their earnings and benefit consumers as well.
“Is giving subsidies good for us consumers? So far, it’s not. Despite subsidies, food is getting more expensive, and food imports are increasing. A solution must be found,” Rajević adds.
Serbia lacks two systemic agricultural laws. According to agro-economic analyst Milan Prostran, the decision to support livestock production is more than welcome, given the dire results in this sector. “Twenty to thirty years ago, Serbia was exporting meat and meat products, but now we are importing them in large quantities. Going forward, Serbia should allocate 10% of the national budget to agriculture. To ensure that money is spent rationally and that both farmers and the public in Serbia have insight into it, two systemic laws must be passed. One law would address the high investment costs in agriculture, including certified seeds, fuel, seedlings, fertilizers, and plant protection products, without which agriculture cannot function today. The percentages of subsidies should be determined, and then every year in Parliament, the budget for these support percentages should be decided. This is important for control. Managing agricultural policy through regulations is not ideal,” explains Prostran.
The second law should be of a developmental nature, such as premiums for livestock. “Premiums have a developmental character, while rebates reduce production costs. Neither of these are part of the price. We must think about developmental projects. Credit lines should be opened, especially for irrigation and drainage systems. These are infrastructure projects that can mitigate the impact of climate change because, unfortunately, our drainage channels are neglected. We’ve entered into investment loans, but given the trends and food crises, we must equip infrastructure objects,” adds Prostran.
It is also critical to preserve scientific institutes for plant production and renew the repro-centers we once had to reduce live livestock imports.
According to experts, Serbia is at a crossroads, as evidenced by the alarming data from the latest agricultural census. Without stronger modernization and market integration of farmers, the survival of Serbian villages will be impossible. However, as the experiences of developed countries show, rural areas do not necessarily need to be focused solely on agriculture. There is potential for the development of complementary activities within the rural economy, which can generate decent income and improve quality of life.
