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What is behind agriculture, the strength of Serbia

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It has not been more difficult for the peasants for a long time. When you look at any segment of agriculture, things are bad. The prices of wheat and corn have plummeted and now you can hardly get 19 dinars for a kilo of grain, although up to half a year ago you were paying 42 dinars. It is similar with corn, although last year the harvest was disastrous, writes

The question is whether sugar beet would have been sown on larger areas this spring if the state had not distributed a serious subsidy with the intention of helping the revitalization of the entire sugar industry.

The road to loss

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Raspberry has been a strong source of foreign exchange for the Serbian economy for decades. This spring, it cannot even be marketed abroad, and the purchase price has dropped from last year’s 500 to below 200 dinars.

In an even worse situation are the ones who take care of refrigeration of products and storage, who have been taking on the entire risk of this delicate production for years. Citizens complain about the extremely high price of potatoes as a result of last year’s disastrous harvest and years of overreliance on imports.

Dairy farmers seem to have it the hardest. An incredible thing happened, milk production, the most complex agricultural activity, leads the farmer to a loss of five to 20 dinars per liter, depending on the number of dairy cows in the herd. In this industry, things have been continuously deteriorating for years, and Serbia has gone from being a country that exported more than 60 percent of its production for decades, to being dependent on imports.

At the bottom of the Atlantic

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An additional blow to the crisis in Serbian agriculture was caused by the war in Eastern Europe. The European export of cheese and other dairy products to Russia has stopped, which has led to large surpluses of milk in the European Union despite the fact that, unlike Serbia, it has put this most complex agricultural activity at the center of its agrarian policy.

State support to agriculture is directed, directly or indirectly, to milk production. In truth, it cannot be said that the cultivation of vegetables, fruits or meat production are not without very significant incentives.

Now that the placement from the Union to Russia has almost dried up, stacks of milk powder are being sent all over the place just to get rid of the extremely large reserves in European warehouses. Older people remember a similar crisis about forty years ago, hundreds and hundreds of tons of butter and milk powder ended up at the bottom of the Atlantic Ocean.

It Is precisely the hyperproduction of milk on the Old Continent that makes the milk crisis in Serbia extremely acute. Although the current state subsidies are not small, it seems that it is necessary to increase them to 20 dinars per liter of milk and 35,000 dinars for each head. And that as soon as possible, immediately.

Overvalued dinar

However, subsidies, as indispensable as they are, will not solve everything. The crisis of the dairy industry in the whole of Europe clearly indicated the major weaknesses of Serbian agriculture. And they are largely of a basic nature and are often caused not only by wrong agrarian but also by certain orientations in Serbia’s economic policy.

It Is, first of all, a monetary policy based on an overvalued dinar. It suits importers, it is a disincentive for exporters, and thus also for Serbian agriculture, which with last year’s 1.6 billion euro surplus in foreign exchange relies on a much larger market than the Serbian one.

In addition to European surpluses, largely caused by the war in Ukraine, the overvalued dinar also made it possible for a liter of European peasant milk to be noticeably cheaper than a liter of Serbian milk. Currently, the price in stores in Serbia is around 140 dinars, approximately 1.20 euros per liter.

If the value of the euro was 180, as most economists estimate, instead of 118 dinars, the price of a liter of milk in our country would not exceed 0.8 euros per liter. Automatically, European surpluses of the most useful beverage at a price above 0.8 would become unprofitable for import.

Not even a head of cattle on the latifundia

It may be absurd, but the deep crisis of agriculture, especially dairying, can help to see the bigger mistakes in Serbian agricultural and wider economic policy that contributed to other agricultural producers also getting into trouble. The issue of privatization of the former social and state enterprises, more specifically of social land, has opened up.

Since Serbia is the only European country without a land maximum, true latifundia with ten or more thousand hectares have been created in our country. Of course, the tycoons focused on simpler and less risky activities such as farming and fruit growing, so there is not even a head of horned cattle on the large estates. Also, most of the large farms with 500 or more hectares are engaged primarily in farming. Such an orientation is useless and even harmful for Serbian agriculture as a whole.

In Europe, the size of the land holding is limited by the regulation of each individual country, the maximum is the largest in Denmark, 300 hectares. Insignificant compared to Serbian latifundia. Such a structure of ownership encouraged the agricultural policy of the EU to direct farms with incentives to the more profitable segments of agriculture, but also to encourage peasants to deal with certain stages of processing agricultural products. This is exactly what makes farms in Denmark, Holland, France, Austria, Germany not only modern, but also profitable.

Thorough reform

The conclusion is not difficult to draw, the current crisis has shown how privatization in Serbian agriculture was carried out in the wrong way. It has reduced itself to the robbery of former social land and for decades it has been slowly bringing small producers to the position of losers and serfs.

It Is indisputable that the peasants should be supported with urgent measures such as increased subsidies, exemption from excise duty on fuel used in agricultural activities. However, in the long term, Serbian agriculture requires a thorough reform, primarily of land policy. Of course, it goes without saying that the state also stops favoring importers and spenders at the expense of exporters and savers through its monetary policy.


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