Amendments to the Law on Agricultural Land
More resultsIntroduction
In December 2015, Law 112/2015 was approved to amend the Law on Agricultural Land 62/2006. The amendments brought significant changes to the rules governing the lease of agricultural land owned by the Republic of Serbia. The main change is the establishment of the right of priority lease of state-owned agricultural land. The lease is extended from 20 to 30 years (Article 5 amending Article 62 in Law 62/2006), and the maximum amount of land that can be leased is 30 per cent of the total state-owned agricultural land in the area under the responsibility of a local self-government (Article 7 amending Article 64 in Law 62/2006).
- Country
- Serbia
- Sector
- Agriculture
- Type of Law
- Capturing a market, an industry or public resources
Description of the law
In December 2015, Law 112/2015 was approved to amend the Law on Agricultural Land 62/2006. The amendments brought significant changes to the rules governing the lease of agricultural land owned by the Republic of Serbia. The main change is the establishment of the right of priority lease of state-owned agricultural land. The lease is extended from 20 to 30 years (Article 5 amending Article 62 in Law 62/2006), and the maximum amount of land that can be leased is 30 per cent of the total state-owned agricultural land in the area under the responsibility of a local self-government (Article 7 amending Article 64 in Law 62/2006).
Applicants for the right of priority lease must be a legal entity registered as active and have an investment plan. The law does not define “investment plan” or provide specific criteria for its assessment. Local self-government is authorised to decide on the applicants’ right of priority lease. In case of appeal or failure to make a decision, the Ministry of Agriculture and Environmental Protection decides.
These changes are significant as the Serbian state owns large areas of agricultural land, which is leased to legal and natural persons by local self-government units. Due to limited land as a fixed asset in the country, agricultural producers are attracted to the possibility of leasing as much state-owned land as possible. The amendments were approved at the end of 2015, following recent efforts of the Serbian government to develop the agriculture sector to meet EU requirements and attract investors.
One of the main foreign investors was the German company Tönnies Group, which in April 2015 signed a Memorandum of Understanding with the Government of Serbia with the idea of investing €420 million in 20 farms breeding 3 million pigs per year.
Critics accused the government of amending the law to meet foreign investor’s expectations at the expense of local farmers, and to benefit companies close to the ruling party (see here, here and here). Smaller domestic farmers struggle to raise the investment required to lease the land. Their ability to finance loans has also been reduced, as the state has given economic resources to foreign companies in the form of subsidies.
Type of law
Act of Parliament, amendments to the law
Scope of application
- Substantive: administration of state-owned agricultural land
- Personal: legal entities, farmers
- Territorial: national
- Temporal: until abrogated
Time of adoption and entering to force
Adopted on 30 December 2015, entered into force on 8 January 2016
Who drafted it
Ministry of Agriculture, Water Supply and Forestry of Serbia
Who submitted it to parliament or other collective body, such local council
Government of Serbia
Relevant developments in the process of adoption that show signs it is tailor-made
The opposition strongly criticised the amendments to the Law on Agricultural Land arguing that they were not fair to local farmers (see here, here and here). The government defended the amendments stating that the law aimed to attract investments in agricultural production, increase productivity and employment, and create significant export potential.
According to the opposition, the law was made in the interests of an investor or group of investors, and changes in the lease and pre-emptive lease were not clearly justified. They proposed calling a public tender and setting a minimum price for each piece of state land to be leased, to ensure transparency. The Serbian Farmers’ Association opposed the lease of state agricultural land to investors who submitted business plans. The association asked the president of the Republic of Serbia not to sign the decree promulgating the law. The agricultural secretary of Vojvodina made the same request (see here and here).
Who adopted it
Parliament of Serbia
Enforcement
Yes
Initiatives to challenge it and their outcomes
Several farmers’ associations and representatives of local self-governments, mainly those that own agricultural land in Vojvodina, asked the Serbian government to withdraw the law. They considered that the law responded to the interests of large investors close to the ruling Serbian Progressive Party (SNS) party, and that smaller farmers’ investments would be jeopardised. The amendments were approved in December 2015 (see here and here).
Affected sector
Agriculture
Direct beneficiaries and related networks
The amendments benefit large companies. According to experts and the political opposition, the amendments were created to align with the requirements of the German company Tönnies Group. In the agreement between the Serbian government and Tönnies Group, the latter was granted the lease of around 5,000 hectares in Vojvodinian (2,420 hectares in the municipality of Zrenjanin and 2,544 hectares near Kikinda) and cultivation of the area of Sečanj Zrenjanin (see here). Approval for the land lease is still pending from local governments in Secanj (2019), Vrsac (2020) and Plandiste (2021).
However, the company never signed the investment agreement and has repeatedly delayed investing, without paying any penalties (see here). In addition, national companies close to the ruling party that were established just before the call to tender or changed their activity at that time, were approved by the Ministry of Agriculture to lease land for 30 years.
According to the Vojvodina Research and Analysis Centre, the company Allquantum Agro obtained lease for 200 hectares in Inđija (see page 26). The company is registered at the same address as Marijan Rističević’s People’s Peasant Party, part of the ruling coalition (see here and here). In Zrenjanin, a long-term lease was obtained by the company Farmer 023 V&M owned by Željko Malušić, head of the city board of the ruling Socialist Party of Serbia (SPS) (see here).
Direct victims
The victims are domestic agricultural producers who cannot secure investments in the same way as large or foreign companies. Farmers cannot participate in the land lease auction for one year because in such a short period they cannot obtain loans of €3,000 per hectare or a minimum of €500,000 for the investment from banks, or repay their investments (see here).
Socio-economic impact
The law reduced farmers’ ability to finance loans due to the seizure of economic resources that the state has given in the form of subsidies to foreign companies.
Impact on rule of law
N/A
Initiatives to challenge it and outcomes
N/A
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