Land on the move: Inequality and consolidation of agricultural land in Serbia
Author: Katarina Kusic and Sladjana Lazic
Source: Lefteast
Published: 11 March 2022
While the recent protests in Serbia have focused on environmental protection specifically and the increasingly authoritarian nature of the ruling party more generally, the catalyst for the protests is land. They started in reaction to a planned lithium mining project by the infamous Rio Tinto company and corresponding legislation that would have made land expropriation possible in a wider variety of cases. The outcome of these mobilizations remains difficult to predict, but it is undeniable that strong, albeit complex, alliances against ecological destruction and the extraction of natural resources are emerging — recently people also rose up against small hydropower plants, in some cases successfully preventing their further development.
Yet despite the successes of these movements, there has been relative silence publicly on the larger and longer process of land expropriation: particularly the sale and consolidation of agricultural land. While large-scale land acquisitions, or land grabs, have accelerated globally since 2008, understanding these processes in Serbia, and Eastern Europe more broadly, follows a different timeline. Here, land grabbing can be traced to the first privatizations in the 1990s and early 2000s. In the countries of former Yugoslavia, privatizations were made even more urgent by the 1990s war and post-war destruction — markets were lost, industries crumbled, and agricultural production stalled. On top of these corrupt processes, the Serbian land market saw a renewed enthusiasm for privatization through investor agreements with eyes on the horizon of EU accession. While the EU Common Agricultural Policy (CAP) is regularly criticised for encouraging land consolidation due to its subsidies linked to farm size, in Serbia these processes proceed even while EU accession remains difficult to imagine. In this final push by the Serbian government for privatization before EU membership, land expropriation has left local farmers once again abandoned, as well as the future of agricultural production generally in the country, all for uncertain promises of future profit.
Background: Privatization, restitution, corruption
The sale of agricultural land in Serbia was widely discussed in the run-up to September 1, 2017, when the Stabilization and Association Agreement (SAA) signed with the EU was set to guarantee EU nationals the right to buy agricultural and forest land in Serbia. This was both in clear contradiction to the national legislation that forbade such ownership, and a source of fear: agricultural land in Serbia was still significantly cheaper than almost anywhere in the EU at that point. An open market would thus bring in unmanageable competition. The matter was resolved by formally allowing EU citizens the purchase of land but regulating it through non-nationality limitations, a practice common in many member states. Since September 1, 2019, the Law on Agricultural Land allows foreigners to buy land if they meet a number of restrictive requirements: they need to be permanent residents of the municipality for 10 years, to have been working on the land for at least three years, to have registered agricultural production, and to own agricultural machinery and tools. Moreover, they can own up to two hectares of land, and cannot own any land within 10 km of state borders.
While this issue of “foreign ownership” serves as a strong rallying cry against the loss of land control, it is also profoundly misleading. Most obviously, even with the ban on ownership by foreign persons, any company registered in Serbia has been free to purchase land since the early 2000s. Thus, the foundations of the current land grab in Serbia cannot be attributed to one piece of legislation or (just) the EU but can be found in the compounding effects of post-war privatizations and wider political and economic restructuring.
Many countries in Eastern Europe have similar histories of forced collectivization beginning in the 1990s when huge swaths of state-owned land were redistributed to their former owners or their descendants in complex processes of restitution. This proved to be fertile ground for diverse land grabs. Ukraine now ranks second among target countries with respect to the total contract area of transnational investments in agriculture; Romania is a sadly well-established target of large-scale land acquisitions; and Bulgaria, where land is fragmented but highly centralized, is becoming another destination for investment.
The former Yugoslav republics, on the other hand, entered the 1990s with a smaller percentage of state-owned land, but similarly intricate difficulties in determining who exactly owns land. In short, large socially-owned enterprises used land with a variety of ownership structures: some socially-owned, some state-owned, and some cooperative-owned or contested. Early privatizations meant the continued use (if not ownership transfer) of state-owned land: agricultural land could not be privatized legally, but the companies could not be sold without usage or ownership rights. In addition, when the 2006 Serbian Constitution removed the category of social ownership (turning it into private ownership), the land that had been turned over to large enterprises by cooperatives and individuals was not returned but was registered as being owned by the enterprises themselves. This set the stage for an incredibly complex and corrupt process of privatization.
The privatizations of large agricultural cooperatives and enterprises constitute major land grabs in Serbia that directly feed into contemporary ones. The first decade of the 2000s and the initial wave(s) of privatization were steered by local tycoons primarily interested in gaining control over the food industry, broadly defined. By capitalizing on their political connections with the parties in power, on the on-going market liberalization, and on land reforms, these tycoons bought up agricultural enterprises (and land) in Vojvodina as a part of their wider attempt to establish control over food production (through monopolization of production and distribution of sugar, oil, milk) in the country.
At this time, both the Privatization Laws (2001, 2003) and the Law on Agricultural Land did not allow cultivated land to be privatized per se. However, a special discretionary opinion by the Minister of Economy and Privatization removed that obstacle by postulating that agricultural land as a part of a company’s capital could be privatized. In short, privatizations happened while property relations were unresolved and cooperative, social, and state property not yet demarcated — a process that has been systematically documented in the reports of the Anti-Corruption Council since then. Their 2003 report explicitly notes the problems of property relations and corruption, and several reports deal specifically with the privatization of agricultural holdings.
Despite the controversy surrounding these large privatizations, the image of big investors as the saving grace of both agriculture and economy remains hegemonic. This was well illustrated in the amendment to the Agricultural Land Law Act in 2015. This heavily protested amendment laid out a specific policy of preference towards “large investments” — each municipality can lease up to 30% of the land under its control to an “investor” outside of the public auctions that usually regulate the lease of state-owned land. The first call from 2017 stipulated a minimum investment of EUR 500,000 — a clear indication of how imaginary this road to progress was for the majority of agricultural producers in Serbia. The amendment was heavily criticized (and protested by farmers) for “legalizing corruption” by placing power in the hands of a small committee without clear guidelines and thus allowing a non-transparent evaluation process. More specifically, the amendment was interpreted as legislative clearing for the entry of Tönnies, a German pork producer, into Serbia — a project that ultimately failed before starting its operations in the country, but the failure of which still reshaped local land relations.
Tönnies investment plans (or speculations) included ca. 75,000 ha of agricultural land leased under the 2015 amendment. Local farmers’ associations contested the decisions in court and won twice, but the trouble did not end there. Some of the land originally set aside for the Tönnies lease ended up in other dubious leases. Around Zrenjanin and Banatski Despotovac, it was leased by PKB Imes, a surviving part of PKB (a subsidiary excluded from the sale to Al Dahra that we come to below). The lease went ahead despite the fact that the company registered significant losses and featured in the media in 2019, when the mass death of malnourished pigs was discovered on one of its farms. Although the lease happened legally through the legislative preference of cattle breeders, local farmers bemoan the lack of land for their own production and the fact that the animals that were the base of PKB Imes lease have since died.
It is important to mention that alienation of agricultural land from small farmers is also accelerated through processes of restitution. The Law on Return of Agricultural Land and the Law on Return (Restitution) of Property to Churches and Religious Communities allowed the restitution of fertile agricultural land to churches and religious communities through a faster and simpler procedure than the one applied in case of the individual owners. Through this process more than 28,000 ha has been returned, out of which the Serbian Orthodox Church (SPC) — an institution legally outside of the taxation system — received more than 24,000 ha. This land is often further rented out at a relatively high price or swapped with some of the well-off local landowners, enabling them to consolidate larger swaths of high-quality land.
Routes of entry for foreign capital
Transnational capital has been involved in such privatizations in Serbia from the beginning and to a profound extent. For example, Baltik Property Invested Limited, an Irish investment firm/fund, has been active in Serbia since 2006, mostly through its Serbian registered company Agri Biznis Partner based in Sombor. Over time, Agri Biznis has become a majority owner of several agricultural enterprises (registered as joint stock companies): PP Miletić from Srpski Miletić near Odžaci, PP Vojvodina, and PP Sombor, from Bački Brestovac, and PP Feketić. Throughout its time in Serbia, the company made headlines on several occasions: firstly, due to the resistance of small shareholders (former employees), who protested against the ways in which it facilitated and mediated privatizations and sales and then because of the dismissal of workers and redundancy announcements; and lastly due to a property takeover that was deemed illegal. The association Obruč and the association of small shareholders Krivaja have been contesting these sales with little to no effect.
While the intensely corrupt privatizations set the stage for the sale of large landholdings, other specific routes of concentration appeared in the last decade. The strategic partnership agreement between Serbia and the United Arab Emirates (UAE), signed in 2013 in Abu Dhabi, pays particular attention to agriculture — it is one of four main areas of cooperation (together with urban construction, aviation, and defence). While the strategic cooperation is primarily driven by UAE’s food security needs and politics, on the Serbian side it is a part of electoral promotion material and personal advancement for ruling elites — a process that has, since the initial signing of the agreement, somewhat shifted from celebrating UAE investors to the current focus on Chinese partners. The sale of agricultural land completed under these agreements of “national importance” has been hotly contested.
The widely reported case of Al Rawafed (which was since bought by Elite Agro LLC) unfolded in 2014 when more than 10,000 ha of prime agricultural land in Vojvodina was sold and leased out. The original deal created a joint company where the Serbian government controlled 20% of the shares, and Al Rawafed the rest. Around 3,500 ha was leased for 30 years from the military institution VU Morović, and the rest was bought from the previously socially owned enterprises Bačka, Jadran, Mladi borac, and Agrobačka. Much of this land was previously leased by local producers who counted on their leases in the future and who then heavily contested the deal once it was announced. Our interlocutors also told stories of intimidation and threats they received for resisting the deal. There were a number of public controversies over the widely reported incidents of underpaying of the land leases (or, in some instances, a complete lack of payment); the consistent underperformance of production (though the promise of increased yields had been one of the key legitimizing strategies for the initial deals); and the complete lack of transparency in how the deal was made. The publicly available financial data shows that the company is starting to make a profit, but it is still not clear whether and how much it is paying for the lease of ca. 7,000 ha of state-owned agricultural land. In 2019, Al Rawafed was taken over by Elite Agro LLC. Elite Agro also owns Zobnatica AD, through its Serbian subsidiary Yugo Elite Agro.
There are also “less traditional” businesses entering the market. LogInEKO doo (owned by Login Establishment registered in Liechtenstein, a company within the LogIn Foundation system) is an atypical player in the land grabbing game in Serbia. They arrived somewhat quietly in 2016 and only recently attracted media attention as a Slovenian company that made and sold the famous “cat app,” and then decided to invest money in organic food production in Serbia. With their leitmotif “Healthy Food for All,” they attempt to distinguish themselves by using IT technology in organic production of food and fertilizers. So far, LogInEko has gotten control of over 4,000 ha of high–quality agricultural land in Banat, Vojvodina, located in the vicinity of the cities of Zrenjanin and Novi Kneževac (including the villages of Mužlja, Kumane, Mošorin, Đurđevo, Sanad, Novi Kneževac, and Srpski Krstur). The company’s operations in Serbia so far have been spared the bad press or criticism that have accompanied some other acquisitions of agricultural land of that size. When in November last year the party Savez 90 Zelenih Srbije asked the Minister of Agriculture to publish the contract between the state and the Slovenian company that bought 4,000 ha, the Minister responded that the state of Serbia has nothing to do with that sale because the land was bought by a Serbian company — LoginEko — thus perhaps bringing into stark relief the absurdity of mobilization around “foreign land” ownership in a situation where anyone can register a “Serbian company” and buy and sell land freely. The most famous and far-reaching meeting point of privatization and transnational capital was concluded in 2018 with the sale of Poljoprivredni Kombinat Beograd (PKB) to Al Dahra from the UAE. While Al Dahra was originally in talks with the Serbian government for the contract that ended up going to Al Rawafed, it first entered the country by buying 51% of the shares in Rudnap Agrar — one of the largest orchards in Serbia (more than 500 ha). The other 49% stayed with a local tycoon, Vojin Lazarević (later in charge of PKB), who sold them to Al Dahra the following year. It was widely and correctly speculated that the smaller investment was preparation for the takeover of PKB, the largest agricultural holding in the country with more than 17,000 ha of agricultural land in the proximity of Belgrade.
Issues / resistance and alternatives
While there was no broad alliance of resistance to the extraction of natural resources until the recent mobilizations against Rio Tinto and the hydropower plants, these expropriations have been contested by various groups since the beginning. In the early 2010s, Pokret za slobodu (Movement for freedom) put in considerable effort to create a broad worker-peasant alliance. They helped mobilize farmers and connected Serbian the particularities of the Serbian context with the transnational peasant movement Via Campesina. Today, the existence of the food sovereignty movement in Serbia is fraught: while there are efforts to map existing initiatives and issues (including those revolving around land), most commentators agree that there is “no movement per se.”
In addition to the mobilizations against certain events already mentioned, these corrupt privatizations have been meticulously researched in two major reports (in 2012 and 2018) by the Anti-Corruption Council. Those same privatizations have also been contested by small shareholders of privatized companies (who mostly earned their shares through employment), as these privatizations saw socially and cooperatively owned land privatized without any remuneration for them. Some of these cases include, for example, the protest against the sale of the shareholders company Aleksa Šantić to Italian Ferrero and the on-going contestation of privatizations in Vojvodina by the association Obruč for almost a decade.
The small shareholders of Poljoprivredni Kombinat Belgrade (PKB) are still contesting the 2018 privatization. Even though the value of their shares is estimated at 12 million EUR, they were completely removed from the privatization process in a pattern repeated in many cases. After protesting, the small shareholders gathered in an association of PKB pensioners were offered a 2 million EUR payment from Fond solidarnosti (a fund usually used for payments to employees of bankrupt companies), in return for giving up their demands, including demands for land holdings (still left with PKB) instead of cash payments. This meant that former employees, now mostly retired, would receive payments of 300, 700, or 1,500 EUR in return for decades of working for PKB, in some cases for literally having founded the enterprise. The deal itself caused internal divisions in the pensioner association between those who accepted and those who opposed the alternative payment and the foregoing of future demands. At the same time, people still at PKB are worried about the increasingly deteriorating conditions: cows kept in sub-par conditions, employees paid minimum wages, and no guarantees that livestock will be kept after the three year contractual obligation to do so ended in November 2021.
Another possible solution to these processes of land dispossession to protect small farmers and family-based farms lies in alternative models of organizing agricultural production, most obvious in the revival of cooperatives known as zadrugas. The cooperative system of zadruga is seen as an institution that can save small and medium-size farms through reduction of production costs, yields increase, and securing product placement. Many farmers today note the failed zadruga experiences from socialism: cooperatives were created in the period after WWII and often relied on the peasants and farmers bringing in their own property (which they were “encouraged” to do by land reforms decreasing the maximum land ownership allowed). This property was privatized when agricultural companies were sold, without fair payments to members of the cooperatives. While the bitter experiences remain, cooperatives are also undergoing a revival of sorts as a currently underexplored way of organizing both property relations and agricultural production. Others, when faced with a lack of available land and/or high prices of rent per hectare, migrate their crops to Romania where they can rent larger parcels for considerably lower prices, and thus themselves participate in an ongoing land grab elsewhere.
Conclusion
There are no easy solutions to the current trend of land concentration and rising land inequality. Farmers are protesting the rising prices of artificial fertilizers, but even without the protest there is not much space to either untangle or contest the complex and corrupt processes of privatizing and concentrating agricultural land in Serbia. While other Eastern European countries, such as Romania and Bulgaria, have developed strong peasant movements, issues of ecology and just green transition in Serbia remain, for the most part, limited to urban environments and are argued in terms of conservation and health. When topics of land ownership and food production are raised in the capital, they are often voiced by right-wing parties and groups, and used to support xenophobic and nationalist arguments. In this way they remain separated from the accomplishments of the transnational peasant movement—specifically the UN Declaration on the Rights of Peasants and Other People Working in Rural Areas and The Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security.
On the other hand, consumers and citizens increasingly care about food and food systems, and a wide variety of small-holders successfully produce food outside of the agro-industrial complex. Yet, both consumers and producers in this category increasingly relate their motivations for these practices to individualist ideas of personal health and wellbeing, exclusionary notions of the “right” to land, and, since the start of the pandemic, mix them in with conspiracy theories. Against this backdrop, scholars and activists from The Emancipatory Rural Politics Initiative in Europe note three crucial steps for developing emancipatory politics in rural Europe: making food political; understanding that small-scale farmers are not the backward past but the urgent future; and working to organize and mobilize around locally embedded practices — such as food self-provisioning — before looking elsewhere for solutions.
What follows from these three strategies is that thinking about a more just land distribution in Serbia and the Yugoslav space more broadly requires broadening horizons beyond land ownership and use, to the ways we imagine food systems. As long as agriculture is oriented towards profit, there is no denying that large, consolidated parcels of monocultures are superior to small holdings. As long as we imagine the future with AI drones navigating large fields, it is possible to use a narrative of underutilization and fragmentation to both encourage and justify the privatization and consolidation of land. Devising alternatives requires bringing together both historical experiences and current initiatives that flourish despite all odds. Historically, even though Yugoslav socialism depended on the industrialization of agriculture, it also provided alternative ways of ownership and economic decision-making. Excavating the potential of that project while learning from its limitations remains crucial for developing a broader politics of a different future in which more just land use can emerge.
This piece was produced with the support of Ecoaction (Eastern European node of the Land Matrix initiative). They are currently operating under the extreme circumstances of the Russian invasion — see their call for action here.
Katarina Kušić is a post-doctoral fellow at the Center for Advanced Studies — Southeastern Europe, University of Rijeka. You can reach her via her Twitter and website.
Slađana Lazić is a peace researcher based in Serbia and Austria. You can reach her via her Twitter.
Find the original article here: https://lefteast.org/land-on-the-move-inequality-and-consolidation-of-agricultural-land-in-serbia/
Aerial view of agricultural land in Srem, Vojvodina (Serbia) [Photo Credit: Erlend Bjørtvedt, Wikimedia Commons]
