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This paper overviews the opportunities and risks of Serbian agriculture's development with the special accent on its financing. We take into account its impact from macroeconomic, social, and individual business perspective, and lay it in context European Union (EU) agricultural policy and changes in Serbian trade policy in line with Stabilization and Association Agreement (SAA) implementation. After discussing the current situation and key characteristics of Serbia's agriculture, we narrow down the research, through identification of dual nature of Serbian farming by locating trends in large-scale agriculture and giving a picture of small- scale agricultural sector using LSMS survey database provided by World Bank. After describing main risks of agricultural business and policy objectives and instruments, the main novelty is a detailed case study of a corn producing farm in Serbian lowland with different financing scenarios. We illustrate previous insights on challenges, risks and policies into a coherent system, by using data along the period from 2008 to 2013. The main conclusions include that major improvement in net cash inflows stem from improvements in cultivation technologies of mercantile corn, relatively significant improvements in average net cash flow are reachable with insurance from drought. Irrigation technology may reduce yield volatility, but initial investments are financially unsustainable with regular commercial loans. That is why which is why we suggest shifting to higher value crops, such as seed corn, should be considered in case of installation of irrigation systems. In such a case, even commercial loans may become a suitable way of financing of investment. The main overall message from the analysis calls for holistic approach in formulating policies aiming to enable sustainable rural development, competitiveness and appropriate financing of output growth amidst rapid global changes and European integrations. |
