Institute for War and Peace Reporting | Giving Voice, Driving Change

Small Farmers Feel Chill Wind of Competition

As big business buys up old socially-owned agricultural complexes, smallholders are feeling the squeeze.
By Petar Klaic

For decades, the flat landscape of Vojvodina has been dotted by small farms interspersed with much larger agricultural holdings.

But now that landscape and way of life is changing. As more and more of the big socially-owned concerns, known as “kombinats”, go under the hammer, their employees and small farmers say they fear for their livelihoods.

The kombinats possess 135,000 hectares; smaller-scale socially-owned cooperatives, known as Zadruge, have 75,000 hectares; and the state 240,000 hectares which it leases out.

Many of the kombinat employees are concerned that their new bosses have little interest in agriculture and merely want to sell off the land at some stage in the future. A good number of the small farmers are worried they will be forced out of business because their big rivals may become more efficient and competitive in private hands.

Recently, several powerful private companies have undoubtedly made their mark on Vojvodina’s farming sector. Having gained fortunes in the era of Slobodan Milosevic in the 1990s, they have turned their gaze towards agriculture and become large-scale landowners by buying up kombinats - which comprise land taken from big landowners and ethnic Germans after the Second World War - and small private farms.

One of the new breed of landowners in the province is Petar Matijevic, owner of the Matijevic meat processing company in Novi Sad.

He has so far bought the Ravnice company in Bajmok, Zlatice in Lazarevac and Bezdan in the town of the same name.

The purchases made him the owner of 5,300 hectares of arable land and leaseholder of the same amount of state-owned land.

Another mogul-turned-landowner is Miodrag Kostic. He recently bought the Panonija company and sugar plants, so becoming the owner of 5,000 hectares of land. Kostic says he intends to purchase other companies that are privatised in Vojvodina.

Currently, arable land fetches a low price of 1,000 to 5,000 euro per hectare in Vojvodina - one-third of the average price in the European Union - but is likely to increase as Serbia makes strides towards the EU.

Advocates of a market economy say the consolidation of farmland is a painful necessity to compete in the European market.

But resistance is growing in Vojvodina from agriculture experts, farmers and kombinat employees.

They want the sell-offs stopped until a special law on the privatisation of land - which has been under preparation for four years - is adopted.

They cite the unclear ownership of land, which is a legacy of the communist era, together with their fears over privatised kombinats being sold off - and their workforce made redundant - or turned into powerful concerns that put small farmers out of business.

“The creation of monopolies works to the detriment of small farmers and enables land to be resold for the purpose of earning quick money,” said Djorjde Bugarin, of the Vojvodina Union of Kombinats.

Stevan Mazic, a small farmer from Novi Sad, reflects the views of many of his colleagues, “We used to grow our produce and sell it at the market where we got the money right away.

“But today the people who bought a lot of land from farmers like me are bringing the prices down. We don’t stand a chance.”

When the Milosevic regime fell, the new authorities promised the quick adoption of a law on denationalisation and the restoration of property.

But that has not happened. Many old owners of kombinat land say their property has not been returned and is going instead to new owners through the privatisation of the socially-owned concerns.

The privatisation process started in 2001 in Serbia, when the first arable land was sold by the companies and associations that had formerly used it. Data from the Serbian Privatisation Agency shows that 48 agriculture companies - with around 60,000 hectares - have been sold to date.

Cedo Keco, an agriculture analyst in Novi Sad, says farmers are right to worry about new monopolies. “If all the large warehouses and silos become the property of one or two companies, a new kind of monopoly will be created,” he said. “ Small farmers will be ruined.”

Keco believes privatisation should be halted also because foreign companies are using loopholes to buy land, even though this is unconstitutional.

What the foreign companies have done is to buy up local companies that already own land. When Agrokor of Croatia purchased the Frikom company of Belgrade, for example, it obtained 1,469 hectares in the Pancevo area. Haju Avis of Debrecen in Hungary took over Sloga in Perlez, acquiring 4,888 hectares.

Keco says the constitution is all too easy to evade, “The foreigners provide the money and the buyer on the record is from Serbia.”

Pascal Bernardoni, of the UN’s Food and Agricultural Coordination Organisation Coordination Office, warns that small farmers may be squeezed out by the privatised kombinats, “In the absence of job creation in other sectors, such as industry and services, this will mean rural emigration.”

But he also points out that average farm sizes in Serbia are small in comparison to Europe and that, in the context of EU integration and globalisation, they need to become more competitive and grow in size.

In the meantime, the towns stand to benefit rather than the countryside, he admits.

“Belgrade or Novi Sad will profit more than rural areas,” he noted. “The big companies now buying the land have headquarters there and will pay taxes to Belgrade instead of Becej, Alibunar or Sombor [Vojvodina towns].”

Matijevic is unrepentant about his recent purchases. “Increasing holdings is a general trend throughout the world for the simple reason that this is one way to get a profit,” he said.

His rival in the property race in Vojvodina, Kostic, voices a similar opinion, “Profitability in agriculture today can only be achieved through mass production,” he said.

“The buyers obviously know that the value of agriculture land will go up over the next decade so they know they can sell at any time for a profit,” said Bernardoni.

“That does not mean their operations are purely speculative. They may sell in a few years or keep this land if it is booming. They understand that investment in land is the least risky business in Serbia now.”

Not all the smaller farmers in Vojvodina feel that the latest trends in land purchase mean doom for their way of life. Vojislav Malesev, head of 105 Plus Farmers’ Club, agrees that the overall enlargement of holdings is the only way to make agriculture pay in the long term.

He wants to see the big agricultural holdings broken down into chunks and offered to smaller farmers to till.

“That is the only way to revive agriculture in Vojvodina for the many farmers who can no longer compete with their small holdings,” he said.

Petar Klaic is journalist with the Novi Sad daily Dnevnik.

This is one of series of articles on Vojvodina produced as part of the BIRN Media Training and Reporting Project, generously supported by the British Embassy in Belgrade.