1. Siemen van Berkum (LEI) and Natalija Bogdanov (UoB) Presentation at the Novi Sad Fair, Novi Sad, 16 May 2012 Serbia on the road to EU accession. Implications for agricultural policy and the agri-food chain

2. Setting the stage Serbia’s income pc is far below EU average Regional income inequality is significant Almost a quarter of the labour force in agriculture Agriculture predominant activity in most rural areas

3. Agricultural sector characteristics Agriculture characterised by small farm units, low productivity and low incomes - 65% of farms are subsistence farms and not integrated in the chain Larger structures in Northern plain regions, with modern, commercial farming Dual structure in agro-processing Ag. production dominated by arable farming Exports of cereals, sugar, vegetable oils and fruits – to EU and neighbouring countries

4. Institutions and agricultural policies Legal and institutional reform are proceeding but important legislation not yet fully implemented while institution building falls short of adequate human resources Annual budget fluctuations in terms of amount and measure reflect inconsistencies in agricultural and rural policy implementation Main support instruments are direct income payments, import tariffs and interest rate subsidies

5. Implications of EU integration (1) Budgetary consequences (assuming accession in 5-7 year): a net-transfer of € 1.1(with phasing-in DPs) to1.67 (without phasing-in DPs) bn to Serbia Serbia eligible for close to €1 bn from Structural Funds Transfer implies 1.4% of CAP budget and 2% of Structural Fund assistance Transfer implies 2.6-3.7% of Serbia’s GDP Transfer of income from EU27 to Serbia has a minor effect on EU’s economic growth rates

6. Implications of EU integration (2) Increased policy predictability and budget stability over longer period Enhanced transparency of the policy - transparent rules, procedures, eligibility criteria for potential beneficiaries More efficient mechanisms for market and income stability. More active land and labor market, financial capital and information flow. Compliance with highest standards of food safety and quality – benefits consumers

7. Implications of EU integration (3) Rising importance of the environmental and natural resources protection. But… some threats exist – with possibly huge social consequences: risk of increasing (already high) regional disparities uncertain position of the large number of small farms – opportunities to generating external or on-farm income become increasingly important closure of small businesses that are unable to meet standards and other market requirements

8. Challenges ahead (1) Adoption and implementation of acquis communautaire requires accelerating: legal and institutional reform on food safety, land ownership, cooperatives, advisory services, etc Enhancing human resources for institutional reform Align with agricultural policy to CAP In a managed process of introducing measures, allowing time to the agrifood sector to adapt Need for monitoring and information system + analytical capacity to evaluate policy impacts

9. Challenges ahead (2) Implement effective rural development policies supporting agri-food restructuring and enhancing employment opportunities in rural areas Provide public services that help agri-food chain to prepare for EU membership Extension, education and research, market information Consistently implement strategy towards accession trust and reliability is a pre-condition for investors

10. Calculation of support National envelop: € 760 mln/year (or 204/ha) 1. Average 2007-2009 production/ha and EU-15 premium per tonne = dp/ha for cereals (260), oilseeds (144) and protein crops (165) 2. EU15 premium in livestock, wine and small products Rural development (Pillar 2): € 386 mln/year (based on ratio Pillar1/Pillar2 in Bulgaria and Rumania) Structural funds: criteria GDP<75% EU average, max.4% of GDP. Bulgaria has similar GDP – € 979 mln

11. Summary budgetary transfers arising from Serbia’s accession