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Rural makeover in the Balkans

FAO-World Bank study explores the changing face of rural space in the Balkans

2 July 2009, Rome - While the Western Balkans are seeing healthy economic growth overall, rural areas are falling behind, according to a new FAO-World Bank report.

Agricultural trade deficits are widening, climate change is putting pressure on agricultural resources, and young people are increasingly migrating to urban areas or abroad in search of economic opportunities.

Key challenges

Although at different stages of development, Albania, Bosnia and Herzegovina, Montenegro, Serbia and the former Yugoslav Republic of Macedonia face similar challenges in modernizing their agricultural sectors to become competitive in regional and European markets.

"The agrifood sectors in these countries are undercapitalized and highly fragmented, dominated by small producers with unsophisticated production and quality control systems," says FAO's David Lugg, a co-author of the report. Processing capacity, a potentially critical part of the value chain, is also limited.

Most farms operate at subsistence or semi-subsistence, while commercial farms often face many obstacles, such as scarce credit or land, expensive inputs, degraded infrastructure and poor access to high-value markets.

These challenges are compounded by the region's ongoing process of integration with the European Union. But the flip side of challenge is opportunity, according to the report, which says that the need to meet EU food safety and other standards while addressing the food and financial crises is a powerful incentive for improving agricultural policy.

"Agriculture and rural development as sources of growth, employment and food security now need to be taken seriously," the report says.

Intended primarily for policy-makers and donors in the region, The Changing Face of Rural Space: Agriculture and Rural Development in the Western Balkans identifies constraints to agricultural competitiveness in these countries, examines public expenditures on agriculture, and diagnoses key challenges for agricultural policy-makers, emphasizing the development of value chains, improved food safety, the need for rural development and climate change mitigation.

Beyond agriculture

"Creating a dynamic rural space in the Western Balkans means looking beyond agriculture at overall rural development," says Julian Lampietti of the World Bank. "What's needed is a balanced approach that emphasizes increased competitiveness of the agrifood sector while providing alternative income opportunities in rural communities to help future generations avoid the poverty trap."

This requires better expenditures on public goods and services and a policy environment conducive to productivity-enhancing farm and non-farm investments, the report says.

Climate impact

The latest climate models project that the Western Balkans will become subject to higher temperatures, reduced and more variable precipitation, and more frequent extreme climatic events, such as floods, droughts and heat waves.

Although the impact of climate change on agriculture remains uncertain, the report calls on the countries in the region to devise comprehensive adaptation strategies. Investing early in climate change adaptations may produce large dividends for the agrifood sector, the report says.

Photo: ©FAO/Antonello Proto
Rural areas lagging behind.