Serbia, Better distribution of subsidies in agriculture is much needed

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After the rebalancing, this year’s budget for agriculture reached 5.3 percent of total revenues, according to the authorities. It is the first time in two and a half decades that more than the legal 5 percent of the entire budget has been allocated for agriculture. However, as of January 1, agriculture will have at its disposal 4.32 percent of the state treasury or 79.9 billion dinars, which is one billion more than this year. Both producers and experts agree that agriculture needs much more money, and that there is a lack of better distribution of existing funds.

The president of the Independent Association of Serbian Farmers, Jovica Jakšić, believes that the agricultural budget will always be small as long as subsidies are distributed in the current way.

“This means that producers whose main activity is agriculture should receive more funds than those whose food production is an additional activity. Agricultural holdings that exist in the register and do not engage in agriculture should not receive incentives. This should be solved systematically and not I know why it hasn’t been solved for a long time. It’s probably a problem in the administration, and I believe it will be much better when e-agrar starts functioning,” says Jovica Jakšić, president of the Independent Association of Serbian Farmers.

“We now have agricultural farms that do not have a single payment on the account and that serve only to get subsidies. The owner leases the land to me or you, and takes money from the budget. It is a lot of money and that is why we are always dissatisfied. The budget that is shown, they are not used to the maximum extent by farmers who are really engaged in agriculture, and that is the essence of the matter. And now we can talk about whether they will get more for milk or for meat or for this or that, all these stories are for nothing,” adds our interlocutor. 

Practice, he explains, has shown that subsidies for investments in agriculture have always reached the right producers. 

“You are not going to buy a tractor or any other machine if you are not engaged in agriculture. What will it do you? There were some abuses, but there is always brokering and that is a classic crime, it has nothing to do with agriculture,” Jakšić points out.

“On the other hand, direct benefits, as I said, are received by all farms that are registered, whether they are engaged in agriculture or not. And this is a problem. We are getting closer to joining the EU and we expect an increase in the budget that we will receive from the EU. But , in the EU we cannot go with subsidies of 8,000 dinars per hectare, if we know that with them the minimum subsidies are 200 euros per hectare. Direct payments should be increased, but abuses must be prevented,” adds this farmer.

Anticipation of the Law on Professional Farmers

Data show that there are more than 400,000 registered farms in Serbia, of which less than a third, around 160,000, are engaged in agriculture. That is why, he emphasizes, it is necessary to pass the Law on Professional Farmers as soon as possible.

“That law would define everything. Who has the right to how many subsidies. Does the farm pay PIO, is it in the VAT system… That it has the right as an entrepreneur or businessman. The system forced us to work more land, because you can’t live on 20 hectares. Who can live on 20 hectares, let me know,” points out Jakšić.

“Everyone knows that you need at least 10,000 euros to live on an annual basis. With 20 hectares, there is no way to earn anything close to that. And who will live from that? You can live if you engage in more profitable production such as medicinal herbs, fruit growing , but that’s where we run into problems with the lack of manpower, disorganization, so no one wants to do it. Even those of us who tried it gave up,” adds our interlocutor.

Consider the effects of subsidies in animal husbandry

Experts warn that animal husbandry is the most endangered part of agriculture, because the number of cows, pigs, and cattle has been drastically decreasing over the years. That is why the state has decided to increase certain subsidies in this sector.

“When we talk about the implementation of the budget for agriculture for animal husbandry, the first thing to note is a positive development, which is that the budget is bigger, which is encouraging. What is very important is to point out that the subsidies are used to encourage and not finance production,” says Nenad Budimović, Secretary for Animal Husbandry and Livestock Products Processing, PKS. 

“The proposal is that the premium for milk for the third and fourth quarter should be the same amount as for the first two quarters, and the proposal should be considered to subsidize every liter of milk produced regardless of the quarterly production. Of course, it must meet the parameters of quality and health security,” adds our interlocutor. 

In order to make the right decision, it is important to see the effects of the incentives given so far.

“It is necessary to carefully consider subsidies for the milk premium, because this measure did not give the expected results, so either it is not good or it is not implemented well. The milk premium is very important for farmers and it is a shame that large amounts of money do not give results”, he explains Budimović.

In order to develop livestock and goat farming, it is proposed that sheep and goat milk be more concentrated, which would encourage farmers to increase production.

“The amount of milk from sheep and goats is about one million liters, so it would not be a burden on the budget,” our interlocutor believes.

“Also, subsidies for fattening animals should be made available to breeders who have more than 5,000 head in their turn, because such producers can ensure continuity in production. One of the measures that would contribute to a good result of the subsidies is that the payment of fattening animals is made according to quality – the evaluation of the carcasses on the line slaughter, as well as that the premium for milk is paid according to quality, which would be confirmed by the national laboratory,” adds Budimović. 

In fish production, he explains, a conditional head of livestock per hectare should be defined, so that they are treated equally when leasing state land. In addition, the amount of current incentives per kilogram of fish produced should also be considered.

“In beekeeping, subsidies should be given according to the amount of honey produced, and not per hive, because according to the current number of hives, honey production should be twice as high,” according to our interlocutor.

“When it comes to poultry farming and the production of table eggs, the level of incentive per laying hen should be considered, because the period of application of enriched cages is coming, which will significantly reduce the number of laying hens, and thus the number of eggs produced by 40%,” Budimović points out.

The most important thing is that subsidies are paid regularly

In the time of great geopolitical changes, the production of health-safe food and the provision of food security are given priority in all countries of the world. This is additionally contributed by increasingly pronounced climate changes that have shown their extremes – drought or floods. These are sufficient reasons for Serbia to pay maximum attention to both primary agricultural production and processing, believes Jasna Bajšanski, president of the Association of Agricultural Journalists.

“I am happy to know that the agricultural budget will be increased and that more money will reach our farmers. When we talk about different types of incentives, the most important thing is that subsidies on all grounds are paid regularly. It means a lot to farmers, especially in the midst of major works”, explains Jasna Bajšanski, president of the Society of Agrarian Journalists.

Also, he says, an adequate model should be found to help small and medium-sized farms more.

“If we look at it from the point of view of the changes mentioned above, we should not allow the shutdown of any agricultural farm, because each one is worth its weight in gold. Direct payments per hectare should be increased as much as possible, especially for small and medium-sized agricultural farms,” ​​Bajšanski believes.

“Extremely significant help to all farmers would be regressed fuel. For years there has been talk about the so-called blue diesel, but everything ends in a story. In practice, it turned out that it is not the best solution that farmers can buy cheap diesel exclusively at NIS pumps because they are in a large number of cases, they are quite far from their farms, so if you add a limited amount to that, it’s already a problem,” says our interlocutor.

Even so far, a lot of money has been allocated to animal husbandry, so that practice, he explains, should be continued with some modified models.

“For example, premiums for milk should be paid directly to livestock farmers, not dairies. Our people are ready to make finished products that are of exceptional quality, and they must not be left to their own devices. And so far, funds have been allocated for young farmers. This is certainly it should be continued to a greater extent if possible,” says Baišanski. 

“I am sure that the farmers themselves have their own proposals that the authorities should listen to. Every dinar invested in agriculture is returned many times over, and with a good distribution of funds, the citizens of Serbia could eat more home-made food at affordable prices. The higher the subsidies, the higher and the competitiveness of our agriculture on foreign markets,” adds our interlocutor.

The agricultural budget in the EU is about 30 percent of the total budget, in Serbia it is 6 times less

If she had the opportunity, she says, the president of the Vojvodina Cooperative Union would also increase this increased budget for agriculture.

“With the latest increase in the agricultural budget, it amounts to slightly more than 5% of the total budget, and the EU agricultural budget is more than 30% of the total EU budget, which in itself speaks of the possibilities of encouraging agricultural production in Serbia and the EU,” says Jelena Nestorov Bizonj, president of the Cooperative Union of Vojvodina.

“In addition, the importance and contribution of agriculture not only to national food security, but also its traditionally most significant participation in foreign trade exchange, show that it is not only the interest of farmers, but also the general interest of the state to preserve and encourage domestic agricultural production,” says our interlocutor. 

The rebalancing of the budget for 2022, he explains, covers some of the outstanding obligations and extraordinary measures, which structurally does not significantly change the purpose of budget funds. In accordance with the above, the basic message is that the agricultural budget should continue to be increased as much as possible in the coming years.

“The largest part of the budget is spent on direct grants, which I think is fine and that even more funds should be directed to this purpose, while support measures (both in direct grants and in other purposes) need to be much better adapted to the real needs in agriculture and market movements, than was the case until now,” explains Nestorov Bizonj.

“For example, in a period of constant growth in interest rates on loans, it would be logical to increase the subsidization of interest rates on loans – in line with the growth of interest rates, and not by a certain percentage increase in the amount compared to last year when interest rates were much lower,” says our interlocutor.

According to her opinion, the basic incentives in plant production need to be increased multiple times, taking into account the enormous increase in the prices of all inputs for agricultural production, as well as the fact that in EU countries these incentives are much higher than in our country.

“For all types of incentives, the limit of 20 hectares of agricultural land for which they can be realized should be abolished, because this kind of limitation makes it impossible for farmers and cooperatives with larger farm areas to realize incentives for complete production,” Nestorov Bizonj believes.

“Also, it is necessary to review the overall agrarian policy in some areas of agriculture, especially in animal husbandry, where despite the existing benefits from the agricultural budget, there is a long-term trend of reducing the livestock fund,” explains the president of the Cooperative Union of Vojvodina.

Reimbursements for fuel, fertilizer, seed material…

In addition to increasing direct benefits, it is very important, he says, to introduce a system of cost regressions for inputs for agricultural production, especially for diesel fuel, mineral fertilizer, seed material… 

“In the EU countries and in the surrounding area, producers are allowed to buy diesel fuel at preferential prices, which are significantly reduced in part of the state levies on the basic fuel price. The fact that the cost of diesel fuel in the cheapest production is enough to explain the importance of this type of savings wheat participates with about 14% in the total costs, while its price has increased by more than 20% since the beginning of this year alone,” our interlocutor points out.

“Additionally, when due to unfavorable weather conditions, at least an average yield of products is missing, as happened this year in most of the production of corn and soybeans, it is not surprising that the producer waits for the time for new sowing without money and the ability to do it with all the necessary investments” , explains Nestor’s Bison. 

Investments, especially in modern mechanization, storage, processing and other capacities, should be encouraged through cooperatives under special programs for cooperatives, bearing in mind that such investments would be more profitable and efficient for cooperatives than the same investments in individual farms, according to our interlocutor. 

“An extremely good measure would be to encourage the cooperative organization of farmers through additional incentives for cooperatives, not only because of the improvement of their market position through cooperative organization, but also because all the goods that cooperatives and cooperatives produce together are in legal flows from which the state collects taxes”, says Nestor’s Bison. 

“The mentioned measure would contribute in the best way to the reduction of the participation of the “gray economy” in agriculture, which for years has been unfair competition to all who do business in the legal system,” adds the president of the Cooperative Union of Vojvodina. 

Although they welcome the increase in the agricultural budget, experts warn that it is not enough for development. According to some estimates, agriculture needs at least one million euros, which is a third more money than was proposed in the state treasury for 2023, RTS writes.

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