Rural Economy & Entrepreneurship – North Macedonia

1. Agriculture

The Pelagonija planning region is located in the extreme southwest of the country. It is bordered on the northwest by the Southwest Planning Region, and on the northeast by the Vardar Planning Region. With its southern border, this region borders two countries, to the south the border with the Hellenic Republic, to which the Medzitlija border crossing for road and rail traffic functions, and to the southwest with the Republic of Albania, to which the Stenje border crossing for road traffic operates.

The region is surrounded by the Baba and Busheva Mountains in the west, Dautica and Babuna in the north, Selecka Mountain and Nidze in the east, and the slopes of the Neredska Mountain in the south and southwest. The region has two fields, Bitola and Prilep fields, which lie on the Black River basin and its tributaries, and part of its border passes through Lake Prespa.

Agriculture in the Republic of North Macedonia provides a livelihood for a fifth of the country’s population, where half live in a rural area. Industrialization of the country was very delayed, due to the long Ottoman domination, and then communist rule. The continental and sub-Mediterranean climates in the country allows for a great diversity of output, but the pronounced terrain creates areas that are unexploitable for farmers. North Macedonian agriculture is dominated by livestock farming, especially in its mountainous regions, viticulture, and the growing of fruit and vegetables, cereals, and tobacco. Agriculture in the country is characterized by numerous small-scale family farms, but also by large businesses, left over from the socialist era. Since its independence in 1991, the country has become a market economy. Today, agriculture accounts for 10% of North Macedonia’s GDP.

According to the Law on Agriculture and Rural Development, rural areas in North Macedonia are defined as “municipal area in the Republic of North Macedonia in which each settlement does not have more than 30,000 inhabitants according to the National Population and Housing Census or population density less than or equal to 150 inhabitants per kilometer squared of municipal space (Law on Agriculture and Rural Development, 2010, Article 63, paragraph 1).

Although the settlements of Resen, Krushevo and Demir Hisar are defined by law as cities, it should be noted that municipalities with the same name are rural areas, as each of their settlements has less than 30,000 inhabitants. It can be said that these are semi-urban settlements in rural areas.

In fact, with the exception of the cities of Bitola and Prilep, all the remaining 343 settlements are part of the rural environment of the Pelagonija planning region. On the other hand, only 32.4 % of the total population in the Pelagonija region lives in rural areas, including residents of the semi-urban settlements of Resen, Demir Hisar and Krushevo.

2. Livestock

In North Macedonia, the farming of sheep is predominant, with 794,053 sheep in 2007. Next are cows (241,257 animals); then goats (132,924 animals); and finally, horses (32,567 animals). Sheep rearing allows for the production of wool, meat, and milk, which is mainly used for the production of cheese. North Macedonian farmers also rear chickens (2,428,828 animals) and rabbits. The country also has 109,769 beehives.

Particularly in the Pelagonija region livestock farming has been developed, as well as the dairy and dairy products industry. Troublesome for the region is that in the period 2009-2013 there was a decrease in the number of all animals by approximately 30%. The number of horses, pigs, goats and poultry is constantly declining in the period 2009-2013, while the number of cattle and bee families is constantly growing. The Pelagonija region is a significant breeder of cattle and sheep nationally, with a representation of 24% and 18% respectively.

Livestock breeding belongs to the agricultural branch – livestock farming. Its main purpose is to provide high quality meat and dairy products. North Macedonia is suitable for the development of this sector. Almost half of the total agricultural land belongs to pastures, which represent ecologically clean zones, which are mostly used for sheep breeding, while the breeding of other cattle takes place on farms – individual (domestic) and specialized farms. Livestock farming, which includes: cattle breeding, sheep breeding, pig breeding, goat farming, poultry and beekeeping, is largely developed in the hilly and mountainous areas of the country.

Although there is great potential for the development of this branch, it has not been rationally used. This causes North Macedonia to be a net importer of raw meat and dairy products, while it is a net exporter of lamb and in certain years, eggs. Given the fact that livestock feed produced in our area does not meet the needs of livestock, North Macedonia largely depends on the import of animal feed.

According to the State Statistical Office, in 2018, compared to 2017, the total number of cattle increased by 0.4%. The number of cattle in individual agricultural holdings increased by 0.9%, while the number of cattle in business entities (agricultural enterprises and agricultural cooperatives) decreased by 14.8%. The number of pigs in business entities in 2018, compared to 2017, increased by 17.9%, while in individual agricultural holdings it decreased by 12.0%. An increase in the number of sheep was registered in individual agricultural holdings by 0.9%, and in business entities their number decreased by 17.2%. In the same period, the number of goats in individual agricultural holdings increased by 27.8%, and in business entities by 9.0%. The number of poultry in 2018, compared to the previous year, decreased by 0.6%.

3. Employment

Agriculture is one of the priority sectors in the Pelagonija region. It participates with 4% of the total production in the region and 5% in the total employment in the region. Excellent agricultural structure and climatic conditions are the main factors that contribute to the successful development of agriculture in the region. In this region, 97% of the total agricultural land is used, which is 5% more than the national level. Most of the agricultural area in North Macedonia is concentrated in the Pelagonija Region, which covers 20.7% of the total area. As the number of business entities increases, so does the number of employees. Taking into account the regional mobility of the population, which often lives in place and works in another (municipality), we are not able to illustrate the situation with the able-bodied population by municipalities, nor by the criterion whether it lives in the rural or urban part of the region. The following table shows statistical data for the active population as an average value for the Republic and the Pelagonija planning region in the period 2016-2018.  
Year 201620172018
RN MacedoniaPelagonija RegionRN MacedoniaPelagonija RegionRN MacedoniaPelagonija Region
Able bodied population (persons)16788901871811679935  1865041682702185778
Activity rate56,564,9568564,856,964,9
Employment rate43,152,544,154,245,155
Unemployment rate23,71922,416,320,715,3
Source: “The regions in R.N. Macedonia, 2019 “- State Statistical Office   As the above table shows, the activity and employment rate in the Pelagonija region is higher than the national average, while the unemployment rate is lower, and there is a continuous decline in the next three years. For the purposes of this study, it is important to consider the ratio of the unemployment rate between the urban and rural part of the Pelagonija planning region. Thus, in 2016, the general unemployment rate was 19%, of which 24.2% in the urban area and only 10.2% in the rural area. In the next two years, there will be a further decline in unemployment, and so: – in 2017, the general unemployment rate was 16.3%, of which 21.5% in the urban part and only 9.1% in the rural part, – in 2018, the general unemployment rate was 15.3%, of which 20.9% in the urban part and only 7.3% in the rural part. It is evident that human capacity in rural areas is limited, the demand for labor is greater than supply, and therefore the number of wages, mainly in agriculture, grows and exceeds the average wage in the manufacturing industry.

4. Quality

The Government of North Macedonia considers agriculture a target area for future investment, growth and development, including increased foreign direct investment.  Although the government provided significant financial support to farmers in the past ten years, the lack of modern equipment and lack of investment in processing facilities remain key weaknesses of the agriculture sector.

Food and beverage processing are significant industries in North Macedonia, as well as fresh fruits and vegetables. Processed foods include both semi-finished products (frozen, dried, and concentrates) and finished products (canned and preserved). Over 75% of processed foods are exported, mostly to the EU and to neighboring countries. Most food-processing facilities are private companies. Financial support to the agriculture sector increased, the number of family farms in 2017 increased by 10,000 compared to 2016, bringing the total number of registered farm holdings in the State Farm Register to 160,000.

Organic production

The first symbolic activity in the organic sector in North Macedonia was observed in 1997, when the pharmaceutical company Alkaloid requested the first organic certificate in the country in order to sell wild herbs (linden, chamomile) as organic on the national market.

The first systemic activities in the field of organic agriculture in North Macedonia practically took place in 2000, initiated by the FIBL / Swiss Development and Cooperation Project, and later the production of organic Japanese apples was supported by the Swiss Program for import (SIPPO). The first control of organic production in the country took place in 2003. The first certificate for organic production was issued in 2004. Immediately after the adoption of the Law on Organic Production.

Certification of organic production in RNM

Several rulebooks and lists regulating the procedures for organic production have been adopted, and the certification process itself is currently performed through two accredited certification houses. The certification process presupposes the introduction of measures for control of the capacities of a certain operator with organic products as a field check and a check of the documentation that they should provide and keep during the production.

Any operator that works with the following can be certified:

  • crops, livestock or beekeeping production,
  • processing and trade in certified organic products and / or
  • collection of wild species and forest fruits.

The process of obtaining a certified organic product involves two product statuses:

  1. a) organic in transition product
  2. b) organic product

Operators licensed for organic production

According to the general data from the Registers of operators in organic production for 2019, 847 operators with organic production are registered in the country, which use 1439 ha of agricultural land. Out of registered operators, only 18 have certificates for processing, 21 for trade and 2 for export. Assessing the number of registered organic products in transition, the growth of operators and areas intended for organic production is obvious.

With a small number of organic producers on the market, prices are dictated by them as they hold more bargaining power. Prices can often be higher by 100-200 and in some cases even by 300%. Rarely are prices the same as or lower than conventional ones (only in cases where there is a surplus that cannot be sold or a product that is second or third class).

In order to support the promotional activities of organic food producers and to strengthen the culture of consumers, the Consumer Organization of R.N. Macedonia and MAFWE launched the website www.organskisvet.mk. The site also has its own mobile application that helps the customer find organic products in their environment.

5. Fishery

Fishing and aquaculture are industries with an insignificant share in the GDP of PPR despite the fact that 177km 2 of Lake Prespa are part of this region.

Namely, the water level of this lake is subject to variations which in the last 20 years have manifested by a constant decrease in the water level. The most drastic reduction of the water level by 250 cm was observed in 2019, as a continuation of the trend in the previous 2018 – reduction of 160 cm and in 2016/2017 – 110 cm.

Residents of Prespa villages complain that due to the low water level they cannot even put boats in the lake, and the pontoon port in Pretor is completely compacted in sand. For these reasons the lake that used to sail tourist boats and have many fishing boats is empty today.

Fishing on Lake Prespa is an activity that is practiced by the inhabitants of the coastal villages in the municipality of Resen, who receive a permit from the legal entity that owns the concession.

Fish farming (aquaculture) is not allowed in the waters of Lake Prespa, while only the species of fish present in the lake can be grown in the waters of river inlets. Such facilities do not exist in the Prespa region. The fishing area covers all waters within the national borders, where commercial fishing is not allowed; in the recreational area fishing can take place from the shore or from an anchored vessel with special restrictions on the period for sport fishing and the allowed quantities of fish caught. The recreational area extends along the entire coast and at a depth of up to 150 meters from the coast.

The Fishing Grounds of Lake Prespa for the period 2017-2021 prescribe also:

  • The way of planning selective and reclamation fishing;
  • The minimum size of fish by species that may be fished;
  • The period of natural spawning by fish species;
  • Natural breeding waters and measures for their protection;
  • Stocking with carp (other stocking is not allowed);
  • Permitted period for fishing by fish species;
  • Permitted fishing equipment (nets, fishing hooks) and equipment used for recreational fishing;
  • Quantities of permitted catch by type of fish for a period of 6 years.

On the largest artificial lake in PPR, the Strezevo reservoir, there is no legal possibility for fishing as an economic activity. The concession for recreational fishing is held by PE Strezevo from Bitola, which also has its own fishpond on the running waters of this reservoir. The other artificial reservoirs in Demir Hisar, Novaci and Prilep do not have registered entities that are engaged in fishing or aquaculture, although there are objective possibilities for that.

All other aquaculture facilities in PPR are located on watercourses of the Crna Reka watershed. A total of 8 fish farms have been registered with a total production capacity of 917 tons, of which 500 tons are carp, amur, tolstobik or catfish, and the remaining quantity of high-quality trout. The stock material (fish juvenile) originates from registered reprocenters.

Although small in number 75, PPR aquaculture facilities account for more than 40% of the country’s total freshwater fish production.

6. Research

The research about the agricultural sector can be identified domestically in public research institutions in North Macedonia and on a European level in participating in EU research programs.

Public Research Institutions

Scientific research institutions in the country participate in most research that is of public interest to the state. They often carry out the research, but also the monitoring, that is needed in the preparation of national, regional and local strategic plans and projects.

Higher education and scientific research are conducted on the principle of unity within the country’s universities, but also as independent public institutions.

From the existing public research institutions, we single out the following ones that are important for the development of the rural economy and entrepreneurship:

  • Institute of Livestock, part of UKIM, Skopje
  • Agricultural Institute, part of UKIM, Skopje
  • Institute of Food, part of UKIM, Skopje
  • Veterinary Institute, part of UKIM, Skopje
  • Institute for Reproduction and Biomedicine, part of UKIM, Skopje
  • Scientific Institute for Tobacco – Prilep, part of UKLO, Bitola
  • Institute of Hydrobiology, National Institute
  • Institute for Standardization of the Republic of Northern Macedonia, National Institute
  • Institute of Economics, part of UKIM, Skopje
  • Institute of Folklore “Marko Cepenkov” within UKIM, Skopje

The agricultural research institutions at the moment have about 300 employees; about 40% are senior scientists –doctors of sciences. Besides the institutes, a smaller amount of agricultural research is carried out in the institutions of higher education.

Participation in EU and National Research Programs

In conditions of prioritizing the economic growth, the education and the research institutions are facing smaller and smaller budgets and lesser possibilities to seek funds for scientific development projects, especially in the agricultural sector, and on the other hand the Euro-integration processes demand active support from the scientific institutions to be able to follow and strengthen the EU accession process and all the obligations deriving from it.

All the institutes are internationally connected and receive support from international projects. The donor network of funds with the neighboring countries (Sida, regional statistics), or training in production of dairy and meat products (USAID, with NAPMDP as a training camp for technicians), and organizations of producers (Sida, the Macedonian National Organization for Agriculture with the Swedish Agricultural Union).