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doi: 10.5937/WBJAE2102123C WBJAERD, Vol. 3, No. 2 (97-172), July - December, 2021
REVITALISATION OF AGRICULTURE OF THE REPUBLIC OF SERBIA
AS A FACTOR OF ECONOMIC DEVELOPMENT
Mihailo Ćurčić1, Stefan Slovak2, Stevan Mitrović3
Abstract
Today, in the era of industrial expansion of developing countries, the Republic of
Serbia strives to maintain the required level of progress and join the European Union.
On this path of transition, it is necessary to use the comparative advantages in relation
to the countries of the region, but also the EU member states. Analysing the available
data, it can be established that an important comparative advantage of Serbia lies in
the agricultural sector. The aim of this paper is to point out the mentioned comparative
advantages, primarily by using the historical-comparative method, and to provide
a basis for further decision-making to economic policy makers at the regional and
national level. The concept of agricultural and economic policy should be based
on the complete revival of agriculture, its revitalization, nancial consolidation,
innovation and afrmation of the intensication of the production framework.
Key words: revitalization, economic development, agriculture, Serbia.
JEL4: Q10, Q18
Introduction
During the past decades, there has been a drastic decrease in the number of agricultural
population, which, among other things, has affected the reduction of agricultural
production in the Republic of Serbia. Determining factors, in the form of low incomes
of the agricultural population, the subordinate position of the rural population and
rural areas, and the continuous industrialization of urban areas, initiated the process
of rural disappearance (RZS, 2011; RZS, 2020).
By efciently exploiting the comparative advantages (Avakumović et al., 2021)
of national agriculture, Serbia could reach the fullness of economic development
(Đorđević, Krstić, 2020) in a short time, based on strong and stable agricultural
1 Mihailo Ćurčić, Ph.D., Assistant Professor, University of Defense, Pavla Jurišića Šturma Street no.
33, 11000 Belgrade, Serbia, Phone: +381 65 400 90 49, E-mail: curcicmihailo@gmail.com
2 Stefan Slovak, B.Sc., School of Management and Economics, Karađorđeva Street no. 52, 34000
Kragujevac, Serbia, Phone: +381 64 535 19 93, E-mail: slovak_knight@yahoo.com
3 Stevan Mitrović, B.Sc., School of Management and Economics, Karađorđeva Street no. 52, 34000
Kragujevac, Serbia, Phone: +381 66 330 669, E-mail: 8stevan@gmail.com
4 Article info: Technical Article, Received: 13th July 2021, Accepted: 10th October 2021.
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124
production, which would, in addition to raw materials, offer higher processing products,
branded or organic agro-food products recognizable in Europe. The marginalization
of villages and rural areas in Serbia, as a basic element of agricultural development,
has been inuenced by numerous historical and social circumstances. They are
mainly manifested through the technological obsolescence of the production base,
pronounced fragmentation and economic weakening of farms, lack of investment
funds, etc., which have resulted in generally low productivity in this sector of the
economy (Đurić et al., 2020).
There is a strong view that adequate investment in the comparative advantages of
national agriculture would nullify the negative effects of most socio-economic trends,
which over the past three decades have led to an outow of labour (brain drain) and
impoverishment of both agriculture and rural areas.
Methodology
During the research, for the purposes of monitoring and analysis of selected
macro indicators, the historical-comparative method, as well as desk research and
deduction methods was used. The methodological framework used allows for an
overview of the current state of the agricultural sector in Serbia, and supports
the adoption of adequate conclusions that would trigger a mechanism for the
sustainability of its development.
The research is based on secondary data that mostly cover the period of the last
twenty years. The context and structure of the research are harmonized with the
used data of the Republic Bureau of Statistics, and the appropriate scientic and
professional literature. For better understanding, all monitored indicators are
presented in tables or graphs.
Agro-economic Aspects of National Agriculture’s State
In 2000, over 2.9 million employees were registered, of which more than 840 thousand
were registered as active in the agricultural sector. On the other hand, in the same year
there were over 500 thousand unemployed persons at the national level (RZS, 2004).
By 2010, there will be pronounced structural changes in the labour market, which to
some extent affect the intensity and continuity of the outow of the rural population
towards urban areas, i.e. predominantly abroad. In ten years, the number of employed
persons decreased by more than 525 thousand (to about 2.4 million persons), the
number of employees in the agricultural sector decreased by over 307 thousand,
while the number of unemployed increased by almost 70 thousand (RZS, 2011). The
latest cross-section of national statistics (RZS, 2020) shows the continued presence
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125
of this trend, as in 2019 the number of employees was further reduced to about 2.1
million, while the number of employees in the agricultural sector was further reduced
to about 450 thousand. In the same period, there was a signicant decline in the
number of unemployed to about 336 thousand (Table 1).
Table 1. Employees in the Agricultural Sector
Year Total Employed Employees in the
Agricultural Sector Unemployed
2000 2,918,589 840,050 500,325
2010 2,396,244 532,969 568,723
2019 2,101,267 452,700 335,900
Source: RZS, 2004, 2011, 2020.
It should be noted that there are approximately 600 thousand agricultural holdings in
Serbia, of which only about 53% are entered in the Register of Agricultural Holdings
(Jeločnik et al., 2021). The declining trend in the number of agricultural holdings is
to some extent in line with developments in the national labour market. The decline
in the number of employees in the observed period is largely the result of the outow
of skilled labour and the distortion of the populations’ age pyramid.
Agricultural land in the Republic of Serbia is mostly privately owned (Trivić,
2021). During the last two decades, there has been a noticeable transition within
the ownership structure of agricultural land, with the growth of private ownership
from 80% in 2002 to 83% in 2010, and as much as 96% in 2019 (Prodanović et al.,
2017). On the other hand, in the previous period, a change in the structure of plant
production is noticeable, i.e. an increase in the fund of arable land can be noticed,
primarily at the expense of areas under pastures. Table 2. shows the agricultural land
by use categories.
Table 2. Agricultural Land by Categories of Use (in 000 ha)
Year Total
Arable Land
Pastures
Arable Land &
Gardens Orchards Vineyards Meadows
2000 5,107 3,356 245 71 587 815
2010 5,092 3,295 240 57 624 836
2019 5,407 4,527 184 21 346 329
Source: RZS, 2004, 2011, 2020.
From the point of view of used agro-mechanization, according to ofcial statistics
(RZS, 2020), the national agriculture sector has about 450 thousand two-axle
tractors, where one tractor covers in average 7.69 ha of privately owned agricultural
land. One of the problems that agriculture faces is the lack, i.e. obsolescence
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126
of agricultural mechanization (Petrović, Grujović, 2002). More than 90% of
agricultural machines are older than ten years, which to a greater extent prevents
the technological progress of the production process and increases production
costs (Đurić, Njegovan, 2016). Generalizing, the production of a certain arable
crop employs a farmer for about 20 days a year cumulatively. Similarly, animal
husbandry is a sector that requires the constant presence of farmers on the farm.
In 2019, the ratio of crop production to livestock in the structure of the total value
of agricultural production was 66: 34%. As a reection of the level of agricultural
development, the share of livestock in total agricultural production in the EU is
about 70% (Domazet et al., 2018; Živković et al., 2019), there is a need to change
the overall structure of agricultural production, in order to encourage growth in
livestock in national agriculture.
Table 3. Livestock production (in 000 head)
Year Cattle Pigs Sheep Poultry
1980 2,367 2,415 2,045 13,248
1990 1,979 2,444 1,805 14,205
2000 1,299 2,536 1,463 13,351
2010 1,002 3,631 1,504 22,821
2019 898 2,903 1,642 15,780
Source: RZS, 2004, 2011, 2020.
According to Table 3, a rapid decline in the number of cattle over the last few decades
can be observed. Compared to the 80’s, the number of sheep has also decreased,
which is mainly a consequence of their extensive breeding on pastures, most often
without the application of modern technology. Modernization and intensication of
sheep breeding would help the development of this branch and overall agriculture,
enabling the placement of specic products on international markets. Like global
trends, the increase in the number of heads of other livestock species (primarily pigs
and poultry) is a consequence of lower prices of fresh meat and processed products,
which initiated the growth of demand for these agro-food products on the world
market (Galloway et al., 2007; Vukasovič, 2014).
Agricultural production is a signicant sector of the Serbian economy (Kuzman
et al., 2017), which participates with about 6% in the creation of national GDP.
However, according to the available resources, there is obviously a discontinuity
in the optimization of the use of agricultural potentials, which is evident from the
oscillations shown in Figure 1.
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127
Figure 1. Agricultural Production (in millions of RSD)
Source: RZS, 2011, 2020.
Looking at the available data for the last three years, there is a stagnant share of
agricultural production in total GDP (about 6%), as well as an increase in the foreign
trade surplus of agricultural sector (about 260 million USD in 2017, about 368
million USD in 2018 and about 508 million USD in 2019). What does not support
the presented are large oscillations in the real growth rate of agricultural production
in the given years (-11.4 in 2017, 15.1 in 2018, and -1.6 in 2019), (RZS, 2020).
According to the results of the research (Marković et al., 2019), at the national
level there is denitely a problem of poor structure and low intensity of agricultural
production, which favours crop (crop production dominates within crop production)
over livestock production, with a current ratio of 2:1. Moreover, it has been shown
that the total value of livestock production has a small impact on the realization of
GVA of national agriculture, with signicant cost burden, unrealistically low prices
of animal products and low level of public support contributing to the collapse of this
agricultural sector (Novaković, 2019). Proven principles of long-term agricultural
sustainability require a change in the production structure in favour of more intensive
branches and lines of agricultural production.
Results and Discussion
After three decades of structural changes, Serbia is a developing country with
the status of a candidate for EU membership, which signicantly dened its
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development policy. Based on the presented data, it is considered that the revival
of national agriculture (specically with the expansion to the agro-industry) is one
of the key elements of sustainable economic development of Serbia. Moreover,
the motivation of the population (especially the younger population) to form or
relocate their household to the rural environment should be the main trump card in
implementing the revitalization of agriculture and rural communities. This would be
achieved by signicant investments in the village (elements of social and physical
infrastructure) and agricultural production (modernization of machinery, equipment
and technology), which would create an adequate business and living environment in
rural areas (Berjan et al., 2015).
From the point of view of creating the necessary preconditions for revitalization,
several weak points of Serbian agriculture were identied (Simonović et al., 2012;
Veličković, Jovanović, 2021): small and fragmented farm holdings, poor production
structure, generally low yields and small production volume, small irrigated areas,
lack of infrastructure elements, general shortage of cooperatives and producer
associations, uncertainty of sales channels, production based on experience rather
than implementation of innovations and strict adherence to the principles of good
agricultural practice, lack of certication, poor age and educational structure of
farmers, depopulation of rural areas, limited investment activity, lack of processing
and value added, and more.
According to some estimates, by 2032, Serbia should defend over a million hectares
of the most fertile land from the effects of drought (Marković, Kokot, 2019; Stričević
et al., 2020). It is estimated that today about 12% of the total number of agricultural
farms irrigate about 3% of the used agricultural land (Ponjičan et al., 2017).
However, the wider implementation of irrigation implies an adequate structure of
crop production and access to sustainable land use (Subić et al., 2017). There are
some opinions (Đurić, Njegovan, 2016) that national agriculture is not able to follow
modern trends by using extensive industrialization. It is necessary to overcome the
problems of low productivity, insufcient use of renewable resources and renewable
energy sources in production, that is, high technological dependence on developed
countries. An important contribution to the growth of agricultural production and
productivity can provide the use of modern management methods, adequate resource
allocation, application of industrial engineering and production planning techniques,
improving the quality of human resources, energy accumulation, investment planning,
implementation of information systems, etc.
It should be noted that agriculture is also rapidly adapting to the post-industrial or
digital revolution and knowledge-based development. Achieving the sustainability
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of agriculture today is harmonized with an adequate level of its intensication, which
targets increased productivity with minimal impact on the living environment, as
well as with the provision of social benets. Today, in the era of the fourth industrial
revolution, agriculture is striving to implement advanced technologies, which
signicantly change the perception of the concept of agricultural production and
rural areas. In addition to this, the frequent linking of accumulated knowledge in
agriculture primarily with IT and biotechnology, leads to its equating with some
of the high-tech sectors (Partoyo, 2019). The mentioned efforts are also applied in
Serbian agriculture (Bešić et al., 2021).
In line with the previous, the appropriate education of persons involved in the chain
of movement of agro-food products from “eld to table” paves the way, not only for
efcient management of farms, but also for effective use of EU funds intended for
agricultural development. Also, in the conditions of national agriculture, it has been
shown that subsidies are essential for its further development, and often survival.
Unfortunately, although Serbia is the regional leader in the realized transfers, it
is noticed that the current level of direct payments and subsidies to households is
lower in relation to the EU members. One of the frequent recommendations is to
intensify the aspiration to equalize, at least the relative level of national and EU
subsidies (52% of the budget), and strengthen the distribution of grants, as well as
more favourable programming of credit lines focused on agriculture (reduction of
interest rates and short-term and long-term loans longer grace period), (Nacionalni
tim za preporod sela Srbije, 2020).
In terms of transitional reforms, the rst decade of the 21st century in Serbia can be
divided into two phases. During the rst, most of the process of privatization and
restructuring of vital parts of the economy was carried out, with the start of the EU
accession process. The second phase is characterized by an emphasis on creating a
stimulating economic environment, and changes in the tax system and the public
sector (VRS, 2014)
One of the most important roles in planning and implementing the process of
revitalization of agriculture and rural areas should be played by local self-government
units, as autonomous management systems for local communities. Also, as a mediator
between public administration and rural areas, local governments should harmonize
and direct local action plans with dened national priorities.
Activities of revitalization of Serbian villages, and moreover agriculture, should be
reected in the following (Pejanović et al., 2017): motivating young people to stay,
return or come to rural areas to establish farms; more pronounced contributions to
the development of rural infrastructure; subsidizing primarily domestic investors
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130
who invest in agricultural and non-agricultural activities in rural areas; ensuring the
competitiveness of agricultural and food products in national and foreign markets;
professional and educational guidance of human capital engaged in agriculture;
support for the strengthening of cooperatives; and more.
Conclusion
A review of the state of national agriculture over the past few decades from the point
of view of agro-economy, identies several main problems: there is denitely a
downward trend in the number of employees in the agricultural sector and a decline
in the number of agricultural holdings. Also, the transition of the ownership structure
over agricultural farms and land is evident, which in a way initiated a discontinuity
in the optimization of the use of agricultural potentials and resources. Today, it is
present through indicators with a negative effect on the competitiveness of national
agriculture and agro-food products, such as outdated technical-technological base,
inefcient use of available resources and production inputs, which nd a logical
alternative in efcient modernization of agriculture (Ćurčić et al., 2021).
Primarily, the basic direction of the national agriculture efcient revitalization
process implementation is reected in the development of human resources, ie in
the motivation of young people for a mass return to rural areas. This would directly
affect the growth of investments in the sustainability of production, as well as in
rural physical and social infrastructure (such as roads, water supply, electrication,
implementation of sewerage and telecommunications network, construction of clinics,
schools, cultural centres, etc.). It would certainly contribute to the modernization
of agriculture and strengthen the position of farmers, while ensuring the growth
of their competitiveness and more efcient management of available resources, as
well as better use of comparative advantages in relation to the region. Also, other
non-agricultural activities would be developed in parallel, generally leading to the
improvement of living conditions in the countryside.
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