Subsidies spark Macedonian agriculture

02/02/2013

Debates over policy persist despite positive results.

By Misko Taleski for Southeast European Times in Skopje -- 02/02/13

Six years of agriculture subsidies have had a positive impact in Macedonia. [Misko Taleski/SETimes]

Six years of growing agricultural subsidies have led to a 30 percent increase in arable land in Macedonia's breadbasket Pelagonia region, reversed rural-to-urban migration and have more than doubled the country's agricultural imports.

However, the gains are not without detractors, leading to a debate on whether to continue the policy implemented by the VMRO government in 2006.

"The subsidies helped farmers stay on the land and secure existence for their families with increasing profits thanks to exports," Veljo Tantarov, president of the Union of Agriculturalists of Macedonia, told SETimes.

"Six years ago, under a different government, the subsidies amounted to 5 million euros. Today they total 135 million euros," he said.

Tantarov said the subsidies prevented a new migration wave from rural to urban areas and will increasingly have a positive effect.

Aleksandar Georgiev, government spokesman, told SETimes that the new laws allow smaller enterprises to obtain up to a 7.5 percent subsidy for products produced and sold, while larger enterprises are eligible for up to 15 percent.

Government assistance covers up to 30 percent of watering, with a maximum of 6,300 euros annually. It also covers up to 80 percent of insurance premiums, and in the future will extend to obtaining agricultural machinery.

"In the 2013-17 period the agricultural subsidies will total 725 million euros," Zoran Konjanovski, deputy agriculture minister, told SETimes.

But opponents offer economic and political arguments against subsidies.

"For the government, subsidies do not represent a real agricultural need which can absorb a large number of working people; the intention is to place large budgetary funds in the hands of farmers-voters, and then tie them and burden them with taxes," said Goran Nikolovski of the opposition Liberal Party.

Some economists argue the problem lies in the fact Macedonia imports some agricultural products.

"[Imports] lead to a big trade deficit ...We cannot satisfy the demand for wheat because of our relatively unfavorable conditions and because imports are cheaper," said Boris Anakiev, professor at the Agriculture faculty in Skopje. "Expensive wheat results in expensive animal feed, thus increasing the price of meat which then becomes non-competitive."

Proponents argue subsidies allowed agriculture exports to rise from 130 to 430 million euros in 2012. The subsidised milk sector doubled production from 25,000 to 50,000 liters over the last five years.

Elsewhere in the region, Serbia is preparing a new law on agriculture and rural development, which will provide subsidies for smaller farms.

"Up until now, the condition to obtain milk subsidies was 3,000 liters every quarter. The new law will allow subsidies to milk producers of 1,500 liters per quarter in the mountainous areas," said Milos Milovanovic, Serbian agriculture minister.

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