14th International Scientific Conference

EUROPEAN ECONOMIES AFTER COVID-19:

CHALLENGES AND IMPLICATIONS FOR THE MACROECONOMIC POLICY
October 27-28 2022, Belgrade

FINANCIAL SUPPORT IN AGRICULTURE DURING PANDEMIC IN REPUBLIC OF NORTH

MACEDONIA

Katerina Hadzi Naumova-Mihajlovska, PhD

Neda Petroska-Angelovska, PhD
Marija Takovska, PhD
Institute of Economics – Skopje
Ss Cyril and Methodius University in Skopje, Republic of North Macedonia
Goals/ Objectives
 Agriculture finance support in Republic of North Macedonia is
very complex. The lack of access to finance is one of the many
challenges that agribusiness managers are facing with.
 Financial support is realized on two levels as:
 State support - through the program for financial support of
agriculture and rural development and
 Commercial support - through crediting.
 Main goal of the paper refers to the impact of restrictions
introduced during COVID-19 pandemic and the measures
regarding the financial support in agricultural sector in North
Macedonia, implemented in the period;
 Also, the paper highlights issue and seeks to answer on how the
impact of pandemic should be used as an opportunity to boost
the agricultural financing for more resilient sector;
Methodology of research

 The methodology of research is based on qualitative and

quantitative analyses of agricultural financing and the
perceived effects of COVID-19 on the sector.
 Based on official data obtained from the State Statistical
Office, Annual reports of the Ministry of Agriculture, Forestry
and Water Management and data from the Agency for
Financial Support of Agriculture and Rural Development we
will discuss the policy implication of the recent trend.
 According to the result few measures and recommendations in
context of improvement of agricultural financing in North
Macedonia will be proposed.
Main indicators of Macedonian
agriculture
Main indicators of Macedonian
agriculture
Macedonian agriculture production before
pandemic crises

 Wine production - The areas under vines in the past strategic period
increased by 7%. The production of grapes in the same period is relatively
stable with an average of about 260 thousand tons per year and a yield of
11.3 tons/ha.
 Tobacco production - High purchase prices and extended income support in
the period 2015-2019 contributed to an increase in income per hectare by
36.3% due to the functional mechanism of production and purchase and legal
solution that meets the needs of all parties in the sub-sector.
 Sheep breeding - the low price of lamb contributed to stagnation and a
gradual decline in the number of sheep in the analyzed period, including the
category of breeding sheep, which indicates a tendency to decrease the
national herd. The decrease in the number is particularly noticeable in 2019.
 Wheat production - the purchase price is stock market, there is no system of
guaranteed purchase and timely payment, nor planned sowing or contractual
production, and intervention purchase is rarely done, although there is legal
opportunity. All this leads to a reduced use of modern technologies and
investments in production and makes this subsector one of the most porous.
State financial support
Programs 2014 2015 2016 2017 2018 2019

Program for financial 6.427 6.309 5.486 6.327 6.752 7.078

support in agriculture
- Vegetable production 4.265 3.797 2.812 3.648 4.174 4.378

- Livestock production 1.869 2.086 2.105 2.447 2.118 2.246

- Measures for 293 426 569 232 460 454

additional support
(state
help)
Program for financial 1.012 1.146 1.657 1.322 1.128 826
support of the rural
development
- Measures for financial 966 1.011 1.537 1.224 1.036 727
support for rural
development
- Technical support 46 135 120 98 92 99

Program for financial 48 42 20 21 16 26

support of fisheries and
aquaculture
IPARD 25 15 254 338 82 739
Total from national funds 7.487 7.497 7.163 7.670 7.896 7.930
Total support for the sector 7.512 7.645 7.417 8.008 7.978 8.670
Credit placements for period
2016-2019, in billion denars
Primary Agricultural Trade in Total
production in processing facilities agricultural
agriculture products

2014 2,2 0,9 0,3 3,4

2015 3,2 7,2 8,2 18,6

2014 3,2 7,4 7,9 18,5

2017 2,5 6,6 4,8 13,9

2018 1,2 4,.7 4,.5 10,4

2019 2,9 6,6 3,9 13,4

Gaps that agricultural producers
were faced during pandemic

 Slowed production activities due to the closure of the usual sales

channels;
 Difficult access of raw materials and uncertain placement of production
because of the closing of borders;
 Increase price of raw materials;
 Increase costs for densification and cleaning in preventing virus
spreading;
 There are mostly no corrections in relation to the agreed price for
products by farmers to wholesalers, large combines and market chains for
farmers, although some farmers have reduced the price of their products
in order to settle the surplus;
 Seasonal workers, because of risk of COV ID 19 infection, asked for higher
daily wage for their labor.
 In the recent period of approximately 10 months, the problem with the
increased price of energy needed in agricultural production, additionally
contributes to rapid increase of costs in this sector
Analyses of agricultural financial
support during COVID 19

 Activated intervention fund;

 Relevant measures to support agriculture:
- financial support for micro, small and medium-sized
enterprises that perform primary production, processing and source of
primary and processed agricultural products;
- payment card for subsidizing 50% of green oil (for 50,000
farmers) in the amount of 4.6 million euros;
- stimulating grape processors and wineries to produce alcoholic
distillate to be used by domestic chemical companies to produce
disinfectants worth 3.5 million euros for a period of three years;
- long-term lease of pastures, consolidation of agricultural land
for greater competitiveness of Macedonian agriculture;
- introducing a program for financing micro-agricultural
enterprises in the amount of 3 million euros.
Concluding observations
 In general, measures effect are short-term and they are not
adequately designed for agricultural sector i.e. late reaction
for financial support to solve the problems in the sector:
 inadequate payment of the financial support in relation to
the time distance between investments and the later sale
collection for agricultural products;
 non-created model for surplus production placement with a
low purchase price;
 removing obstacles for small producers placement in order
to increase their penetration on the market;
 Increase in financial risks due to the one-time short-term
approach in providing financial assistance and crediting
 Non - existing of favorable credit with easy terms and fixed
interest rates;
Recommendations
 Access to favorable credit to cover the losses caused by
reducing production and canceling the agreed purchase;
 Developing the credit market for agricultural producers,
such as factoring and leasing services in agriculture;
 Support of a guarantee fund for farmers who do not have
property as a guarantee for crediting;
 Creating a agriculture credit union which will allow access
to join capital through membership;
 Redesigning of subsidies system in a appropriate one for a
season character of production;

Agricultural producers should not be exposed to short-term

solutions. It’s important to decrease the uncertainty and risk
by creating clear, consisted and focused policy in supply
chain in food production.
Thank you for your attention!