Public-private dialogue for growth project

Within the project “Public-Private Dialogue for Development”, NALED, in cooperation with the Agro Cluster and the Republic Secretariat for Public Policies and with the support of USAID, initiated a dialogue between the public and private sector, with the aim of making and implementing recommendations for improving the current conditions, in order to raise organic production in Serbia to a higher level.

WHAT IS PUBLIC PRIVATE DIALOGUE?

Public-Private Dialogue (PPD) is a process that involves communication between citizens, businesses and civil society organizations on one hand, and the state, local governments, public enterprises and other institutions on the other, regarding the matters of public interest, particularly the ones relating to the content of legislation and the manner of law implementation.

PPD has many different forms: public debates on legislative proposals, public hearings in the Assembly, participation of citizens’ and businesses’ representatives in the work of public bodies, informing the public about the reforms that are being considered or implemented, delivering comments, remarks and opinions to state bodies, citizens and businesses opinion survey on public policies and implementation of regulations, exchange of opinions at roundtables and conferences, etc.

Public-private dialogue represents a true partnership between the private, civil and public sectors, with its essence being two-way communication.

PPD IN SERBIA

Although good regulations and their adequate appli-
cation are the essential interest of all participants, the PPD practice in Serbia is still not established as a regular one. According to the Regulatory Index of Serbia for 2017/18, 60% of laws relevant for business did not go through a public hearing in the previous year, 90% was made by urgent procedure, while half of the draft laws were not available on websites of the relevant ministries. According to a survey conducted by Ipsos in June

2018 for NALED, the biggest obstacle to implementing the dialogue indicated by public sector is the lack of time for businesses to be included, because some regulations have to be developed urgently (46%). However, associations believe that the public sector does not have sufficient capacity to process all the comments they propose (67%), while businesses resent that the Government is only copying EU regulations without consulting them (48%). Also, research has shown that business associations are far more active and achieve better results in public-private
dialogue than individual businesses.

The importance of PPD for economic development

The experience and knowledge of the private sector regarding the implementation of regulations in Serbia, good practices and legal solutions that exist in more developed countries can be of great help to public administration when designing reforms to improve the investment climate. Early involvement of businesses and business associations in drafting legislation ensures their later application in practice. Along with strengthening trust between state institutions and the economy, public-private dialogue contributes to the legitimacy, transparency and predictability of the legislative decision-making process.

Of public sector representatives say there is no one in charge of communication with businesses in their institution

Of public sector representatives think regulations would be significantly better if they consulted the businesses

Of businesses negatively assess the quality of PPD, the same number says they aren’t member of any association

Of businesses did not participate in any consultations about drafting regulations in the last 12 months

ABOUT THE PROJECT

The Public Private Dialogue for Growth Project helps build effective and sustainable cooperation and communication between the state, businesses and the civil society.

Key activities and expected results in the period 2018 -2021:

• Capacity building for public private dialogue in state institutions and six selected businesses associations or civil society organizations
• Support for advocating and implementing six key reforms to improve the business environment
• Creating the first guide, online training programs, models and tools for public private dialogue
• Establishing PPD Hub as a central place for public-private dialogue

Topics in focus

In the first year of the project, three business associations and three priority reform topics were selected to receive support in PPD, jointly conducted by the state and business community.

Beekeeping Association of Serbia (SPOS) initiated the issue of tackling bee poisoning in Serbia. Association for the Development of Entrepreneurship (URP) advocates the improvement of the lump-sum taxation system.

Agro Cluster of Serbia (AKS) is dedicated to elimination of regulatory obstacles to organic production.

Of public sector representatives think that the level of dialogue with businesses is high

Of business associations has participated in the dialogue regarding the drafting or implementation of regulations

DEVELOPMENT OF ORGANIC AGRICULTURE

Organic production is a system of sustainable agriculture based on high compliance with the principles such as health and environment protection, fair production and care for the overall ecosystem. Organic products are grown without or with minimal use of synthetic fertilizers, with no pesticides and other harmful substances, thus being considered healthier for people and the environment.
According to the data from 2016, there were 3,184 producers certified for organic farming in Serbia, which was a threefold increase compared to 2012. Farmers grow their products on soil covering the area of 14,400 ha, accounting for only around 0.4% of all arable land in Serbia. The majority of organic production is intended for export, mostly to EU markets. Highest exports are recorded for products with lower degree of processing, such as frozen and minced fruit and fresh vegetables, thus making the producers’ earnings lower than they could be. Nevertheless, the value of organic products exports has been continuously rising, from 3.74 million euros in 2012 to 19.6 million euros in 2015.

WHY DIALOGUE?

For many years, organic agriculture in Serbia has represented unused potential and a lost development opportunity, due to a range of administrative and systemic obstacles faced by the producers:

• The list of plant protection products allowed in organic production in the domestic market is outdated and not aligned with the EU practice. Our farmers are forbidden from using the protective substances allowed in the EU, thus causing uncertainties in planning production and making our farmers less competitive in the EU market.

• Incentives for organic production in Serbia are still far lower than in the EU. Even though the national budget allocations for subsidies were increased by 20% in 2018, it is still not enough to make our organic production more competitive.

DIALOGUE GOALS

The list of plant protection products allowed in organic production in the domestic market is outdated and not aligned with the EU practice. Our farmers are forbidden from using the protective substances allowed in the EU, thus causing uncertainties in planning production and making our farmers less competitive in the EU market.

• Inspections do not have the adequate mechanism to control the organic production, resulting in fake and questionable organic products appearing for sale in green markets, thus undermining the market position of legitimate organic food producers, while misleading the consumers in terms of the quality of products they buy. Smaller households cannot trade in organic products with higher degree of processing in the domestic market, as Trade Law states that individual farmers can trade only in products with first degree processing, while further degrees requires them to register as a business entity.

• The period of conversion of conventional into organic soil lasts two to three years, and during this time a farmer needs to have a signed agreement with an authorized certification company. However, in the meantime a certification company may lose its operating permit, which is reissued annually, thus complicating the producers’ position, without them holding any responsibility for it. Additionally, the time needed for conversion practically disables production on rented state land, given that the lease period stipulated in regulations is too short.

Organic agriculture in the EU

In EU countries, organic products are grown on 6.7% of arable land on average, which is 16 times more than in Serbia. If we look at Austria, with 21% of its arable land being used by 24,000 registered organic producers, the difference is all the more distinctive.

Dialogue initiated by: Agro Cluster of Serbia

The association Agro Cluster of Serbia (AKS) was jointly established in late 2017 by three institutions: Produktna berza Novi Sad (Stock Exchange), Institute of Agri cultural Economics Belgrade and University Educons Sremska Kamenica. At the moment, Agro Cluster brings together 11 members, around a common mission of developing adequate environment for improving agricultural production, by recognizing shared problems faced by producers, traders and processors in the agricultural market, and advocating the joint interests before state institutions. The association helps its members in applying for EU funds, organizes educational programs for building the skills and knowledge of domestic businesses operating in agriculture and food industry. In less than a year of work, the organization has developed cooperation with 15 other associations and funds, as well as the regional development agencies, and achieved successes in initiating and coordinating amendments to regulations enabling easier trade of wheat.