Serbia Newsflash Week 4, 2022

Rising interest for organic production 

Organic agricultural production in Serbia is more and more prevalent and there is a rising interest of growers who would go organic, which is evidenced by the increase in the number of farmers and area size used for this type of production, stated Ivana Simic, the advisor to the Minister of Agriculture for organic production and member of the Serbia Organica organization.

“Currently, about 21 thousand hectares of land is used for organic production and there are close to 7 thousand farmers involved,” Ms. Simic said.

However, the advisor also presented data suggesting that only 0.6% of all agricultural land in Serbia is currently cultivated organically and emphasized that the task of the ministry is to increase those areas to 2 – 3% of the total arable land in the next five years.

For this purpose, Ms. Simic added that in 2021, the regulation has allocated around €2.1 million for organic production while in 2022 those funds are increased by more than 60% to €3.2 million.

“An organic farmer can receive an incentive of €220 per hectare, and those who are in the process of conversion and currently acquiring their organic grower status can also count on that grant,” Ivana Simic emphasized.

Shortage of nitrogen fertilizers in Serbia

As reported in the our Newsflash last week, Serbia is now short 200 thousand metric tons on nitrogen fertilizer for the spring crop sowing season. Minister of Agriculture of Serbia Mr. Branislav Nedimovic stated that 70 thousand tons of mineral urea fertilizer will arrive in Serbia next week and that there is enough nitrogen fertilizer on the market for the spring wheat fertilization.

Mr. Nedimovic explained that the government had provided favorable loans for farmers for the purchase of mineral fertilizers, meaning that short-term loans of up to three years with a grace period of up to one year has been agreed upon with 10 commercial banks.

The government will finance the interest. “That means that a ton of fertilizer that costs €920, if bought with cash, will be €850, which means that the Government would pay about €70 per ton,” the minister explained.

Additionally, the import of nitrogen fertilizers and anhydrous ammonia will be exempt from customs duties in the next six months in order to stabilize the domestic market and provide sufficient quantities of these products necessary for the spring sowing season. This measure will enable duty-free import and will also ensure the supply of farmers.

Mr. Dragan Stevanovic from the Serbian Chamber of Commerce (PKS) explained that there is a shortage of mineral fertilizers on the global market, and that dependence on imports can be prevented only if domestic production grows faster than the consumption of fertilizers. PKS also commented that there are three producers of mineral fertilizers in Serbia: Elixir Prahovo, Elixir Zorka, and PROMIST. Annual production reaches about 550 thousand tons of NPK fertilizer and from 30 to  50 thousand tons of UAN fertilizer. Serbia imports an average of 450-500 thousand tons of nitrogen fertilizer and 200-250 thousand tons of NPK fertilizer, mostly from the Russian Federation, Austria, Romania, Hungary, and Croatia, according to the PKS.

Grant program for purchasing houses in rural areas

The Minister of Rural Welfare, Mr. Milan Krkobabic, announced that following previous similar programs, €4.2 million will be allocated for the purchase of another 500 empty houses in the villages of Serbia.  

“We will continue with the allocation of houses, mini-buses, and support to a village meeting festival without delay,” the minister said in a statement on the decision of the Serbian government to adopt several new rural programs. Minister Krkobabic pointed out that programs related to cooperatives, multifunctional facilities, cultural centers, as well as support for economic activities will soon follow.

“This is the our answer to numerous requests and a great interest shown by people who see their future in the villages of Serbia,” Mr. Krkobabic explained.

It was also stated that the goal of the policy is to motivate the rural population to stay in the countryside and encourage young people to return there.

A thousand hectares of abandoned land

Throughout 2021, 1.319 parcels of agricultural land owned by the state, with a total area of more than one thousand hectares were found abandoned in 12 municipalities, states the national broadcaster RTS.

Most of these farm parcels are in the municipalities of Belgrade, Pancevo, and Veliko Gradiste, adds RTS. The verification of property law relations is in progress, after which the state land will be offered on lease under very favorable conditions.

Since the government introduced this mechanism, about 2.900 hectares of abandoned land have been leased, on which new, modern orchards and vineyards are being planted, RTS points out.

So far, searches for state-owned abandoned agricultural land, followed by bidding, have been conducted in about 30 local municipalities. “The starting price is €0, and the tenant of this land will be the one who offers the most. This price refers to the lease for a period of five years. After the expiration of that period, the price will depend on whether it is an area under 10 hectares, in which case, the lease will be the amount of 10% of the average price of state-owned land in the municipality where it is located,” explains Branko Lakic from the Agricultural Land Agency.

If the area ranges from 10 to 50 hectares, the tenant will be obliged to pay 40% of the average price, said Mr. Lakic. However, despite the favorable conditions for the lease, there are no interested parties for certain derelict parcels. According to Mr. Lakic, these parcels are so derelict that recommencing cultivation would require an investment that exceeds the financial benefits of leasing.