Tobacco Sector Analysis in North Macedonia: Subsidies, Production, and Policy Perspectives

Abstract

This comprehensive empirical research examines the landscape of tobacco production in North Macedonia, placing a specific focus on the historical development and economic significance of the tobacco sector within the national and regional agricultural framework. It provides an in-depth analysis of tobacco leaf production, including a comparison with other regional tobacco producers, to contextualize North Macedonia's position in the broader tobacco industry. The study also investigates the dynamics of agricultural imports and exports, with a particular emphasis on raw tobacco, delving into the complex interplay between domestic production and international trade. Central to this empirical research is a critical evaluation of the financial support mechanisms in agriculture, particularly the extensive subsidies directed towards tobacco cultivation. These subsidies are analyzed in terms of their economic rationale and effectiveness, questioning whether the prioritization of tobacco over other crops is justified given the current economic climate and market demands. The empirical research further explores the implications of these subsidy policies in light of North Macedonia's aspirations to align with the European Union's Common Agricultural Policy, which presents unique challenges and opportunities for reforming agricultural support systems. By integrating quantitative data with qualitative policy analysis, the empirical research aims to provide a nuanced understanding of the economic impacts and sustainability of tobacco subsidies. It assesses whether these subsidies are an economically prudent allocation of national resources, especially considering the potential for aligning with EU standards and the necessity to foster a more diversified and sustainable agricultural sector. The findings are intended to inform policymakers and stakeholders, offering strategic insights and recommendations for future agricultural policy development in North Macedonia. Using a descriptive statistical approach, the study evaluates data on tobacco production, subsidy distribution, and trade dynamics. The findings reveal potential misalignments in subsidy allocations and recommend policy adjustments to foster a diversified agricultural sector in alignment with EU standards.