FOUR new local funds created to support agriculture and food production
October and November 2022 saw the creation of funds to support agriculture and food production in Novi Pazar, Bela Palanka, Vlasotince and Nova Crnja. In the absence of other sources of finance, these innovative revolving facilities provide funding that local farmers need for initial investment to enhance and scale up production on their holdings.
Serbia has long struggled with access to finance for small-scale farmers. Commercial banks see them as risky and lack products suited to their needs, the country has no savings and loan cooperatives, and other sources of finance either provide one-off access or smallholders are not eligible for them. Farmers therefore have to forego investment or rely on their own scant funds to buy new agricultural machinery and equipment they need to grow their farms and improve living conditions in the countryside for their families.
To address this issue, we have partnered with the Ana and Vlade Divac Foundation and regional development agencies to create this new municipal agriculture financing facility. The revolving fund provides multi-year support by allowing farmers to access interest-free finance, which is repaid into the fund after one year to become available to other smallholders. This financing also helps bridge the gap to other financial programs, subsidies, and grants accessible in the Serbian market.
Four new agriculture development funds were created in October and November 2022 in partnership with the Novi Pazar, Bela Palanka, Vlasotince and Nova Crnja local authorities, development agencies (SEDA, South, Centre for the Development of Jablanica and Pčinja Districts and Banat Regional Social and Economic Development Center), and the Ana and Vlade Divac Foundation. These facilities are worth 15 million dinars, and user-friendly and transparent calls for applications will be published in early 2023 to award the funds.
A total of 13 local agriculture development funds have been set up since 2020 with USAID support, suggesting strong interest from Serbian local authorities and a good track record for these facilities. The Big Small Businesses Project aims to create at least another 10 of these revolving funds in the coming three years, which would take us closer to ensuring each Serbian municipality has a sustainable solution for financing farmers. The relevant line ministries are also expected to help find ways to provide additional capital for these funds.
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