DEVELOPMENT OF DIRECT PAYMENT MEASURES IN THE MACEDONIAN PROCESS OF HARMONIZATION WITH CAP

Abstract

Agriculture, as a vital sector for socio-economic development in Macedonia, gains more importance for the policy makers during the process of harmonization with the Common Agricultural Policy (CAP) of the European Union. Since the start of this process, the national agricultural policy is under continuous reform; thus, the scope, the form and the type of the budgetary transfers to agriculture have been under constant change in the country. The aim of this paper is to describe and evaluate the development of the Macedonian agricultural policy, with a focus on the development of the direct payment measures. The analysis is based on the annual programs for financial support of agriculture (direct payment scheme dataset) and on the completed budgetary transfers classified by the Agricultural Policy Measures Classification scheme (APMC database). More systematic and structural changes for adjusting national agricultural policy towards CAP are established with the Law on Agriculture and Rural Development adopted in 2010; therefore, the analysis covers the period from 2010 to 2017. The analysis confirmed that direct producer support measures are the dominant instrument in the Macedonian agricultural policy, distributed mainly in a form of coupled payments (per output, cultivated area or head of livestock). The main recommendations derived from the findings are: to enlarge the share of decoupled measures in the direct support scheme; and in time, to gradually direct the policy toward rural development measures.