Economic progress in Macedonia has beenvariable and slow during the last 10 years. This slowprogress is attributable to the succession of political andeconomic shocks, and the failure to complete economicreform. Agriculture is an important sector in the Macedoniaeconomy, with production and processing contributing around18% of GDP. As a small economy with a structural deficit inmost food commodities, agricultural trade is essential forMacedonia. Current agricultural trade policy, however,constrains agricultural trade. Most Macedonian imports arecovered by free trade agreements under the Stabilization andAssociation Agreement and with regional trading partners.Direct support for agriculture derives from the budget ofthe Ministry of Agriculture, Forestry and Water Economy, andthe activities of the State Office for Commodity Reserves(SOCR). Budget support is minimal due to the severe currentfiscal restrictions. Most support comes from SOCR, throughits purchases of wheat and tobacco to maintain officialfloor prices. Macedonia has 1.28 million ha of agriculturalland, about half cultivable and half pastures. All sociallyowned land was nationalized in 1993. Existing irrigationschemes have been reduced from 40% to 13%. The state of thecountry's irrigation system is poor and crop damageduring the variable summer dry period is prevalent. Producequality suffers from lack of needed infrastructuresupporting post-harvest treatment and packing. The priorityareas for agriculture, the expansion of production, andincrease in productivity, require that resources beavailable to efficient private producers, includingefficient small ones, and a processing and marketing chain,so that they can expand in areas where they are competitive.This will require a comprehensive restructuring ofgovernment policies and support.
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