Agricultural development remains a priority for all economies, not only in response to the essential resource needs of a growing population but also due to its substantial contributions to total employment and GDP. The chapter analyses the performance and trends of agriculture policies across three sub-dimensions. The first sub-dimension, rural development and infrastructure, assesses strategies and programs related to rural infrastructure, livelihood support, and irrigation systems. The second sub‑dimension, agricultural support systems, covers the policy, governance and instruments in the agricultural sector. The third sub-dimension, food safety and quality, focuses on the policy framework regulating food safety and on the food quality legislation and agencies, which are key tools in an economy’s path towards productive and sustainable agriculture.
Western Balkans Competitiveness Outlook 2024: Montenegro
15. Agriculture policy
Abstract
Key findings
Montenegro’s overall agriculture policy score has slightly decreased since the previous Competitiveness Outlook (Table 15.1), primarily due to the limited progress observed in enhancing its rural infrastructure and irrigation policy frameworks. However, the economy made some notable advances in improving its food safety and quality policies, positioning it as the top performer in the region in this sub-dimension.
Table 15.1. Montenegro’s scores for agriculture policy
The key findings are:
Despite substantial funding allocated to rural infrastructure from both the government of Montenegro – now totalling EUR 4 million annually – and external donors, this augmented financial support has not yet engendered a significant improvement in rural or irrigation infrastructure. Consequently, Montenegro’s rural areas continue to grapple with challenges arising from poorly developed road networks, limited electricity and Internet coverage, and inadequate access to irrigation.
While Montenegro has a relatively well-developed agricultural policy framework, little progress has been achieved in harmonising its priorities with those of the EU Common Agricultural Policy. Strengthening alignment with the EU acquis is crucial not only for Montenegro’s EU accession journey, but also for reinforcing the effectiveness and competitiveness of these policies.
Since the last assessment cycle, Montenegro has improved its producer support instruments, largely bolstered by a 42% increase in the national agriculture budget between 2022 and 2023. As such, the economy exhibits the highest levels of support in the region at EUR 171/hectare, nearing the EU target of EUR 200/hectare.
Limited efforts were made to strengthen the economy’s performance in agricultural research, innovation, technology transfer and digitalisation (RITTD), as Montenegro still lacks a national policy framework and government programmes supporting RITTD. Given the economy’s vulnerability to climate change, there is a pressing need to promote the adoption of knowledge and innovations for climate change mitigation and adaptation.
There is room to bolster government capacities regarding the provision of extension and advisory services. In recent years, the Directorates for Advisory Services have increasingly struggled with personnel shortages and an unfavourable employee structure, which have hindered the effective transfer of professional knowledge and advice.
Montenegro stands out as a regional leader in food safety, plant and animal health due to its strong alignment with EU regulations. Moreover, the economy has continued to update and harmonise its legal bases with the EU acquis, as seen through working groups and amendments to existing laws. However, this same level of harmonisation has yet to be achieved in food quality policies.
State of play and key developments
While the agricultural sector in Montenegro plays a relatively smaller role than its Western Balkans counterparts, it remains a significant component of the economy. Specifically, the agricultural sector contributed 6.3% to the national GDP in 2022. However, this figure has been steadily declining since 2015, except for 2020 when it rebounded to 7.6% (Figure 15.1). Between 2021 and 2022, the sector's value added to GDP experienced a further slight decrease, primarily attributed to increased production costs resulting from the adverse consequences of Russia’s war of aggression against Ukraine.
Meanwhile, employment in the agricultural sector as a proportion of total employment experienced a notable uptick around 2015 and has since oscillated between 7.5% and 8.0% (Figure 15.1). Despite these variations, this figure remains one of the lowest in the Western Balkans, falling far below the regional average of 13.5% of employment.1
Figure 15.1. Agriculture’s contribution to gross domestic product and total employment in Montenegro (2010-22)
Agriculture’s share in value added and employment are denoted in percentages
Source: World Bank (2024[1]).
In terms of international trade, Montenegro’s export of agrifood products increased by a mere 7% in the period between 2020-21 and 2022, while imports grew by 48% in the same period, contributing to a 53% growth in the trade deficit (Figure 15.2). This trend underscores the economy’s increasing dependence on food imports. Furthermore, despite a stable proportion of agrifood imports to total imports over the years, the weight of agrifood exports to total exports has decreased over the past decade.
Figure 15.2. Montenegro's international trade of agrifood products (2014-22)
Millions of EUR
Source: SWG (2023[2]).
Although agriculture’s decreasing contribution to national GDP and relatively low employment levels in Montenegro might suggest limited significance, it is crucial to recognise that its importance varies by region. Namely, it holds notable significance for the populations of rural areas, as an estimated 70% of their income originates from agricultural activities (FAO, 2023[3]).
Sub-dimension 14.1: Rural development and infrastructure
Rural infrastructure in Montenegro remains relatively limited and underdeveloped, particularly when contrasted against the economy’s urban centres. In fact, rural areas constitute most of Montenegro’s territory: according to the OECD’s methodology of defining rural areas – areas where the population density is less than 150 inhabitants per km2 – the entire economy could be classified as “rural.” However, it is also possible to further disaggregate this classification into predominantly rural areas (more than 50% of the population lives in rural local communities), transitional regions (15-50% of the population lives in rural local communities), and predominantly urban regions (less than 15% of the population lives in rural local communities). According to this system, the economy’s Northern region is predominantly rural, while the Coastal and Central regions are considered to be transitional regions. Thus, given the prevalence of rural areas, ensuring robust, well-connected rural infrastructure is vital.
Road networks are poorly developed in many rural areas; data collected by the Statistical Office of Montenegro found that around 13.5% of the total road network in the economy was characterised as “dirt or uncategorised roads”, underscoring the widespread nature of the challenge. Inadequate development of the road infrastructure limits the functional connectivity both within the economy and with the neighbouring regions. This in turn can complicate the delivery and access to markets and essential services for farmers and agricultural producers. Key obstacles to further developing the transport infrastructure include unfavourable topography, limited budget resources, and pronounced seasonal fluctuations in road usage.
Similarly, Internet infrastructure reveals a significant disparity between rural and urban areas in Montenegro. This digital divide is evident in Internet access rates, with 84.9% of urban households in Montenegro having access to Internet compared to only 70.9% of those in rural areas. This more limited coverage in rural areas can restrict farmers’ ability to access information on line as well as rural populations’ access to digitalised public services. The gap is less pronounced for electricity infrastructure, although some rural parts of Montenegro still do not receive sufficient coverage by the power grid.
To combat these challenges, the Ministry of Agriculture, Forestry and Water Management (MAFWM), the primary body tasked with overseeing Montenegro’s agricultural policy, allocates nearly EUR 4 million in the annual agriculture budget to enhance rural infrastructure.2 This support focuses on the construction, adaptation, and rehabilitation of road networks to better connect rural households and katuns (seasonal pastoral settlements or small mountain villages), the development of electrical networks, and operational support for machine rings (or ensuring that farmers engaged in collaborative arrangements have access to shared machinery or equipment).
The government has also initiated more well-defined projects aimed at improving infrastructure. For instance, in collaboration with electric power companies, Montenegro is currently working to develop its electricity infrastructure through the construction of new power lines and transformer stations, alongside maintaining the existing network. Additionally, support for the procurement of solar panels through the Instrument for Pre-Accession Assistance for Rural Development (IPARD) programme extends benefits beyond remote areas to include processing facilities with grid access, providing environmental sustainability, and economic advantages through on-site electricity generation. This support is funded by both the national budget and the IPARD III programme.
Several donors have offered financial support to further strengthen Montenegro’s rural infrastructure. One prominent example is through the United Nations’ International Fund for Agricultural Development (IFAD), which funds the Rural Clustering and Transformation Project in Montenegro. This project was implemented across seven municipalities – Nikšić, Šavnik, Žabljak, Mojkovac, Bijelo Polje, Berane and Petnjica – and had the primary objective of improving smallholder producers’ access to water and road infrastructure. By the conclusion of the project in 2023, 121 sections of road, totalling nearly 50 km in length, were asphalted, with the support of EUR 2.96 million in funding from the United Nations. Another donor has been the European Union, which provided a EUR 525 000 grant in March 2023 to Montenegro through the Western Balkans Infrastructure Framework to support the new Broadband Infrastructure Development Technical Assistance Project (WBIF, 2023[4]).
Currently, there is scope to enhance the robustness of the economy’s approach to rural livelihoods. The Strategy for the Development of Agriculture and Rural Areas, which serves as the national framework for enhancing rural livelihoods, focuses on improving the economic and social conditions of rural areas in Montenegro, particularly through the enhancement of rural infrastructure and services.3 Such an objective is central to addressing disparities in economic development, infrastructure, and access to services for rural populations. Beyond this national framework, Montenegro has also aligned with several prominent international standards, such as the United Nations’ Sustainable Development Goals, providing a broader framework for rural development and poverty reduction.
The government of Montenegro administers several programmes geared toward economic development, tax reduction, social security, rural diversification, and agri-tourism with the explicit objective of bolstering rural livelihoods. Notably, there is an absence of programmes specifically aimed at ameliorating education or health access and quality in rural areas. These initiatives draw financial support from the national agriculture budget under Axis 3, “Measure to improve the quality of life and to expand economic activities in rural areas”, as well as from IPARD III’s Measure 7 (“Farm diversification and business development”). Currently, there are no local action group (LAG) partnerships operating in Montenegro. However, the government of Montenegro recently proposed an amendment to the Law on Agriculture and Rural Development that would recognise the registration of LAGs. Additionally, the government has been closely co-operating with EU authorities to establish, fund, and consolidate LAGs to help improve rural areas as a better place for living. Montenegro is eligible for IPARD III funds under the LEADER4 measure (Measure 5) once it is entrusted with the implementation. This change reduced the population requirement for each LAG area from greater than 10 000 inhabitants to greater than 3 000 inhabitants, allowing the economy to meet the conditions for beginning the formation of such partnerships. However, the full implementation of the LEADER measure will start only after it is entrusted and would benefit from the Montenegro Government funding a similar project from the national agriculture budget to establish a LAG-like group and prepare and adopt a local development strategy.
Montenegro faces challenges with underdeveloped irrigation infrastructure, characterised by inadequate coverage and outdated policies, with nearly 35% of its surface area experiencing either a lack of access or limited access to water. Of the 51 000 hectares (ha) of land suitable for irrigation, only 15‑17% has been successfully irrigated. The negative effects of this limited irrigation are exacerbated during the summer and persist in arid areas; these repercussions are likely to worsen as climate change increases average temperatures and results in an irregular distribution of precipitation.
The existing and planned irrigation activities in Montenegro emphasise the sustainable use of water, soil erosion and degradation, and drought mitigation measures. Extraction and use of surface and underground water for irrigation of agricultural or other land is carried out in accordance with the conditions established by water permits issued by the Water Administration. Owners or users of irrigation facilities and systems are responsible for paying management and maintenance costs in proportion to their use.
Since the last assessment cycle, some progress has been achieved toward improving the economy’s irrigation infrastructure. For example, in 2022, the Water Management Project Incentive Programme for the financing of obligations and needs for water management was allocated EUR 1.2 million: EUR 900 000 toward constructing the water supply systems in rural areas; EUR 80 000 for individual water supplies; and EUR 200 000 toward implementing water management plans in the Danube and Adriatic water basins. However, even that level of funding is considered too limited to allow the government to fully execute its responsibility in this area.5
The MAFWM is the entity tasked with overseeing the formulation and implementation of policies guiding the economy’s water management. This government body is currently drafting the national Plan of Irrigation Development, which will serve as the foundation (alongside the existing Law on Water6) for future developments related to the irrigation system. Policies created by the government are subject to a formal consultation process between national, regional, and local government actors as well as academia and international institutions. However, while co-ordination exists among the different levels of government, there is a lack of horizontal institutional co-ordination in relation to rural irrigation, which can hinder efficiency by preventing effective and quick communication across the relevant entities. Additionally, one key actor that is absent from these consultation processes is water user associations, as they do not exist in Montenegro.
Sub-dimension 14.2: Agriculture support system
The agricultural policy framework of Montenegro is guided by two documents: the Law on Agriculture and Rural Development, and the Strategy for Agriculture and Rural Development (2023-28). The Strategy for Agriculture and Rural Development outlines five primary goals for its operational period: increasing resilience and competitiveness; effective management of resources; improving rural population’s quality of life; establishing a knowledge network for technology adoption; and ensuring transparent agricultural and rural development policies. The new Strategy for Agriculture and Rural Development (2023-28) was designed to complement and further build upon the goals outlined in previous strategies and those of the EU’s Common Agricultural Policy (CAP). Despite these continued efforts, the economy’s national policy framework only aligns with three of the ten EU CAP objectives.7
Yet, while this framework is not entirely harmonised with the CAP, Montenegro benefits from the Instrument for Pre-Accession Assistance for Rural Development (IPARD), which serves as a valuable tool in supporting Montenegro’s efforts to gradually align its agricultural and rural development policies with EU standards. The overarching aim of the IPARD programme is to improve competitiveness, increase the added value of products, create new jobs, improve rural infrastructure, and provide support through agroecological-climatic measures and organic production measures, which all combined can contribute to improving living conditions in rural areas. Under the most recent cycle, IPARD III (2021-27), Montenegro has received entrustment for the budget implementation task of three measures: Measure 1 (“Investments in physical assets of agricultural holdings”), Measure 3 (“Investments in physical assets concerning processing and marketing of agricultural and fishery products”), and Measure 7 (“Farm diversification and business development”). Throughout IPARD III’s whole implementation, nearly EUR 82 million of grants will be available to Montenegrin farmers, EUR 63 million of which comes from EU funds (European Commission, 2022[5]).
Agriculture policy is headed by the MAFWM, which not only drafts legislation but also oversees implementation measures. Within MAFWM, there are five relevant directorates: the Directorate for Agriculture; the Rural Development Directorate; the Directorate for Payments; the Department for Economic Analysis and Market; the Department for Extension Services in Plant Production and the Department for Extension Services in Livestock Production.
The MAFWM also operates several agricultural information systems within Montenegro. One such example is the Farm Accountancy Data Network (FADN), whose establishment followed the successful conclusion of a project with the Food and Agriculture Organization (FAO) in 2021. This project resulted in a new, state-of-the-art FADN along with the software for data collection for the 32 farms in the system. The Department for Economic Analysis and Market and the Advisory Services for Plant and Livestock Production are the entities responsible for collecting data through the FADN, although collection paused in 2022 due to the cyberattack. Montenegro also has a Land Parcel Identification System (LPIS), which the government has expanded in recent years. In 2022, the system helped to identify 4 988 new plots, covering a total area of 2 257 hectares, bringing the total to 21 461 plots over 11 757 hectares. The Directorate for Payments plans to continue enhancing the methodology, regulations and software used for the LPIS to record new areas and overcome challenges, such as the identification of meadows and pastures. There is also a farm register, which had a total of 17 665 farms registered in December 2022.
Montenegro faces considerable vulnerability to climate change, particularly in its agricultural sector, where effects such as inconsistent precipitation, extreme weather events, and drought directly impact production (Government of Montenegro, 2021[6]). The government’s commitment to sustainability is evident in the Strategy for Agriculture and Rural Development (2023-28)’s emphasis on achieving the goals of the Green Agenda. However, despite this policy focus, there has been little else done to promote environmental or sustainability concerns in the agricultural sector through policy measures. Even in Montenegro’s 2019 Law on Protection from the Negative Effects of Climate Change,8 the sole reference to agriculture is the requirement that the MAFWM submit a report on the measures it has implemented every two years to prevent the negative impacts of climate change. Moreover, there are no specific policies related to climate change mitigation, nor are there mitigation targets related to agriculture in policy documents or strategies. In addition, the government has not yet conducted an assessment of climate change’s impact on the sector.
Producer support instruments are one of the main pillars of Montenegro’s budgetary support policies in agriculture. More broadly, the national agriculture budget in Montenegro has been growing in recent years, benefiting from a 42% increase in national funds: in 2023, the budget exceeded EUR 66 million, of which nearly EUR 45 million came from the state budget (Figure 15.3). The remaining EUR 21 million were either donations or loans.
Figure 15.3. Budgetary support for the agriculture sector by funding source in Montenegro (2018‑22)
Millions of EUR
Source: Information provided by national authorities for the Competitiveness Outlook assessment.
Moreover, when considering support on a per-hectare or per-inhabitant basis, 2022 saw the highest levels of support, with payments averaging EUR 171 per hectare and EUR 70 per inhabitant (Table 15.2). Although this per-hectare payment is the highest among the Western Balkan economies, it falls short of the EU’s established threshold of EUR 200 for 2023 (European Commission, 2023[7]).
Table 15.2. Montenegro’s budgetary support for the agricultural sector (2019-22)
EUR
Source: SWG (2023[2]).
These support policies are partially aligned with EU CAP policies. Under the last IPARD cycle (IPARD II 2014-20), Montenegro achieved some progress in harmonising its legal compliance and strengthening its institutions in accordance with the EU acquis. This improved alignment is seen through the implementation of conditionality requirements outlined under EU CAP: some producer support instruments (namely the direct payments) in Montenegro are linked to compliance with food safety, animal or plant health, or environmental standards. Additionally, the government intends to prepare to align its Strategy for Agriculture and Rural Development with the new EU CAP programme (2023-27) between 2022 and 2025, followed by three years of implementation.
Since the last assessment cycle, many producer support instruments have been updated. Livestock producers now benefit from a simplified criterion, enabling all producers to apply for support regardless of herd size (measured per head). Subsidies for cows, breeding heifers, and pigs also increased, with EUR 6.5 million earmarked for direct payments in livestock. Subsidies for dairy products – namely milk and cheese – experienced a 20% and 25% rise, respectively. Beekeeping received a 45% increase in support, while plant production saw expanded direct payments, including higher base payments and new incentives for unused agricultural land. All these changes were introduced to ensure that producers were able to access a greater number of direct payment schemes and therefore obtain significantly more financial support. This in turn aligned with the government’s broader goals of boosting self-sufficiency in food production, increasing the number of hectares of agricultural land used for production, and enhancing the stability of producers’ income.
Risk management support in agriculture involves financing a portion of the expenses related to insurance against crop and livestock damage for registered agricultural holdings. Starting from 2021, the assistance for insurance against the damage to agricultural crops or livestock or against fire damage has increased from 50% to 60% of the insurance policy. To qualify for this support, producers must be registered in the Register of Agricultural Farms and adhere to all agrotechnical and animal welfare requirements. In 2022, the MAFWM provided support for 415 insurance contracts, totalling EUR 222 195.
One unique support scheme in Montenegro is the additional assistance offered to young farmers. Since 2021, the support for these farmers rose from EUR 10 to EUR 70 per hectare. Such a scheme clearly reflects the priority conferred by the Strategy for Agriculture and Rural Development to generational renewal, or facilitating the transition of younger generations into farming to ensure the continuity and sustainability of the agricultural sector.
Regarding agricultural trade policy, Montenegro does have import tariffs for certain agricultural products, as outlined in several agreements with trading partners, such as the EU, Türkiye, and Ukraine. Additionally, as part of the World Trade Organisation (WTO) accession schedule, Montenegro’s ten-year transitional period to reduce import tariff duties concluded – an action reflecting the economy’s commitment to fully aligning national legislation with WTO rule. Montenegro does not offer any export subsidies, credit support, or duties for agricultural commodities. Although there have not been any changes to this trade policy since the last assessment cycle, these policies are subject to monthly monitoring and evaluation using benchmarking, and are revised annually.
With respect to the agricultural tax regime, Montenegro does not have a specific fiscal policy related to agriculture and rural development, nor are there specific tax provisions for farms, cooperatives, or agriculture-related businesses. Instead, the only provisions are that farmers are exempt from paying sales tax and that beneficiaries of IPARD support are exempt from paying value added tax (VAT) on the EU co-financed IPARD project. The government does not assess the impact of tax policies on small farmers, nor does it evaluate how these policies affect the environment or natural resource use.
Montenegro has significant room to strengthen its agricultural research, innovation, technology transfer and digitalisation performance, which is currently underdeveloped. There is no national policy or regulatory framework guiding RITTD, although the government is in the process of drafting legislation and organising stakeholder consultations. An Agriculture Knowledge and Innovation System (AKIS) has not been established to date, but there are ongoing efforts to gather the relevant entities that would eventually serve as the primary actors within an AKIS. Furthermore, there are no government programmes directly contributing to RITTD, including the absence of specific initiatives promoting the adoption of innovations or knowledge transfer by farms or agrifood firms.
However, while there are no programmes directly related to RITTD, the MAFWM offers free public advisory services to farmers to promote their access to technology and knowledge. These services are widely used, with approximately 18 000 farms using them at least once in 2022 (Government of Montenegro, 2023[8]). Advisory services are generally used in several areas, including the registration of agricultural holdings, the implementation of on-site controls, and the preparation and submission of applications for support through national and international programmes (including MIDAS,9 IPARD, and the International Fund for Agricultural Development). Both the Department for Extension Services in Plant Production and the Department for Extension Services in Livestock Production support agricultural producers by providing professional assistance through practical demonstrations, workshops, and expert publications.
While the MAFWM’s advisory function has been prevalent, recent developments such as the introduction of direct payments and the establishment of the Farm Accountancy Data Network (FADN) have led to reduced knowledge transfer and experience sharing with agricultural producers. Consequently, this lack of knowledge transfer can directly impact the success and sustainability of agricultural production, particularly given the importance of supporting young farmers to ensure generational renewal and the future viability of farming operations. Moreover, the two relevant directorates, the Department for Extension Services in Plant Production and the Department for Extension Services in Livestock Production, face challenges stemming from insufficient staff numbers, an ageing workforce, and an increasing workload. The pressure placed on these government bodies is further exacerbated by the absence of any regulated and institutionalised private agriculture advisory services.
Sub-dimension 14.3: Food safety and quality
Montenegro’s national policy framework covering food safety, animal health and plant health is advanced and comprehensive, addressing key areas such as hygiene, risk reduction, reliability, and transparency. Moreover, the legal bases for food safety, plant health and protection, and animal health and welfare are fully aligned with the relevant EU legislation. Such success in alignment has been supported by Montenegro’s strategy for the transposition and implementation of the EU acquis for Chapter 12 (Food Safety, Veterinary and Phytosanitary Policy), which is continuously revised and implemented. The second update of the strategy was adopted in September 2023, and the text is in the final stages of harmonisation with other public authorities. Additionally, as changes to the EU acquis are introduced, Montenegro has quickly responded; for example, in September 2022, the government formed a working group to propose and adopt amendments, harmonising national legislation with the updated EU acquis concerning official controls.
The Directorate for Food Safety, Veterinary and Phytosanitary Affairs is the sole public administration in Montenegro in charge of sanitary and phytosanitary (SPS) measures. It is composed of three sectors: the Food Safety Sector, the Veterinary Sector, and the Phytosanitary Sector. This Directorate is further supported by the national laboratories that test food safety and animal and plant health. Currently, Montenegro is undertaking the necessary activities to accredit its laboratories in accordance with EU legislation (Box 15.1). However, the designation of national reference laboratories is still pending.
The overarching objective of ensuring food safety and animal and plant health requires a strong implementation of risk-based inspection policies and capacities. The economy has established a well‑structured risk assessment framework, aligning its risk assessment and management regulations with SPS rules. This risk approach is enshrined in the three major pieces of legislation in the field: the Law on Food Safety, the Veterinary Law, and the Law on Plant Health Protection. Montenegro uses various methodologies developed by international organisations, including the World Organisation for Animal Health, the World Health Organisation, the FAO, and the European Food Safety Authority. Additionally, recent updates to capacities for risk-based inspection have led to the revision of manuals, checklists, inspector training, and databases.
Box 15.1. Montenegro’s food safety laboratories
At present, there are numerous laboratories operating in Montenegro that conduct testing to ensure and strengthen the economy’s food safety. Some of the main laboratories include:
The Diagnostic Veterinary Laboratory – This public laboratory primarily operates in the domains of food safety, animal health, and feed safety. It is accredited to perform microbiological analyses of animal food products, including meat, dairy, and eggs.
The Institute of Public Health – This public laboratory is accredited to conduct microbiological analyses of food products and any items or materials that come in contact with food.
The Centre for Eco-toxicological Research – This public laboratory conducts analyses of residues and contaminants of pesticides on food products. It has accredited 30 methods of testing, and its results are mostly recognised by the EU (apart from equine, milk, rabbit, and wild game).
The Biotechnical Faculty of the University of Montenegro – This institution houses two laboratories: the Laboratory for Seeds (which performs exams, quality checks, and certifications of seed materials) and the Phytosanitary Laboratory (which is primarily tasked with promoting plant health through laboratory examinations of harmful organisms).
The Laboratory for Quality and Food Safety – This laboratory mainly performs analyses of various types of foods, particularly for honey and wine. It is accredited to perform eight methods of honey testing and sixteen methods of wine analysis.
Source: Information provided by national authorities for the Competitiveness Outlook assessment.
Maximum residue levels (MRLs) are defined in line with EU legislation in the “Regulation on maximum residue level of pesticides in or on plants, plant products, food or feed”.10 The regulation, amended annually with the latest update in June 2023, prescribes the maximum levels of pesticides to ensure consumer protection and monitor pesticide residue.
While Montenegro has achieved nearly full alignment with the EU acquis in the field of food safety, animal and plant health, its food quality policies have not reached this same degree of harmonisation. The primary policy framework for food quality is the Strategy for Agriculture and Rural Development, which underscores the importance of enhancing product quality. Another relevant legal base is the Law on Quality Schemes,11 which outlines the methods and procedures for establishing quality schemes for agricultural and food products and for assessing their conformity with specifications. Furthermore, the Law on the regulation of the market of agricultural products serves as the economy’s specific legislation on Common Market Organisations (CMOs).
National food marketing regulations are only partially in line with EU standards, lacking complete alignment with the new quality schemes of the EU. The Law on Quality Schemes outlines legislation on Geographical Indications (GIs), specifying various protection systems. Two ordinances – the Ordinance on designations of guaranteed traditional specialties of agricultural and food products and the Ordinance on registration of designations of origin and geographical indications of agricultural and food products – detail the technical forms for registration. GIs for alcoholic beverages fall under a separate law, the Law on Strong Alcoholic Beverages.
However, achieving total harmonisation in food quality policy is subject to several challenges. A general lack of knowledge or awareness among producers and consumers regarding food quality standards hampers co-ordination and adherence to obligations and good practices. Moreover, the public advisory services provided by the MAFWM lack sufficient administrative capacity. Thus, even though institutional procedures have been established, no products in the market are registered under any of the voluntary quality schemes.
Regulations on organic foods, as outlined in the Law on Organic Food Production, are only partially aligned with the EU acquis. Montenegro has one local organic certification body, Monteorganica, which is accredited by the MAFWM and monitored by the Accreditation Body of Montenegro. Additionally, the MAFWM is currently implementing a pilot scheme to apply for the entrustment of IPARD Measure 4, focusing on "Agri-environment-climate and organic farming," which may be an important source of support for the expansion of organic agriculture in the future (European Commission, 2023[9]). The economy would benefit from this expanded support, considering its limited certified organic area, which amounted to a modest 823 hectares across 473 farms in 2022 (Government of Montenegro, 2023[8]).
Overview of implementation of Competitiveness Outlook 2021 recommendations
Montenegro’s progress on implementing past CO Recommendations has largely been limited, with only minor advances made in the areas of rural infrastructure and aligning direct support with the EU acquis. Its progress was more substantial in terms of successfully implementing the IPARD II programme. Table 15.3 shows the economy’s progress on implementing past recommendations for agriculture policy.
Table 15.3. Montenegro’s progress on past recommendations for agriculture policy
The way forward for agriculture policy
Considering the level of the previous recommendations’ implementation, there are still areas in which Montenegro could strengthen its rural development and infrastructure or its agriculture support system, or further enhance its food safety and quality policies. As such, policy makers may wish to:
Continue prioritising the expansion and modernisation of rural and irrigation infrastructure. Despite the recent funding from the MAFWM for improving road, electricity, and irrigation networks, additional financial resources are needed to accelerate the pace of progress. One potential avenue could be fostering collaborations with donors such as the European Bank for Reconstruction and Development or the FAO to co-finance projects that might be challenging to fund independently.
Hire additional staff in the public advisory services to strengthen government capacities. To improve the effectiveness of the Directorates for Advisory Services and to enhance their capacity to handle their responsibilities, the government of Montenegro should allocate resources to hiring additional staff members in both animal husbandry and plant production fields. Moreover, given the ageing demographic of the advisors, the Directorate should prioritise hiring younger engineers in order to rejuvenate the department, ensuring the seamless transfer of knowledge and good practices for continued success.
Develop policies and assessments to evaluate the impact of climate change on the agricultural sector. Despite Montenegro’s considerable vulnerability to the adverse effects of climate change, there is little policy focus on how these consequences translate to agriculture. Therefore, the government must advocate for and encourage implementing climate-smart agricultural practices and technologies (Box 15.2). This may include promoting drought-resistant crop varieties, water-harvesting techniques, and sustainable land management practices.
Box 15.2. Enhancing agricultural resilience through climate change mitigation: Insights from Italy
In recent years, Italy has emerged as a leader in terms of fortifying its agricultural sector against the impact of natural hazards, particularly droughts. Recognising its vulnerability, Italy has successfully implemented governance frameworks encompassing disaster risk management, agricultural risk management, agriculture policy, and water governance – all of which converge to create holistic, overarching guidance both vertically and horizontally across the government.
Additionally, Italy has sought to improve resilience through several innovative good practices focused on preventing or reducing the risk of droughts. Several initiatives that are in place include investments to improve water use efficiency, subsidised insurance policies (for financial mitigation), and new digital tools and support systems. One such tool is the IRRIFRAME software, which provides tailored advice to farmers about irrigation to maximise water productivity. It can develop irrigation schedules that account for the economic costs and returns for several dozen crops, and support the collection and aggregation of water management data.
Source: OECD (2021[10]).
Strengthen the alignment of the national agricultural strategy with the EU CAP objectives. Given that the Strategy for Agriculture and Rural Development (2023-28) only aligns with three of the ten EU CAP objectives, there is significant scope to better harmonise these policy frameworks. A higher degree of alignment can facilitate access to EU funding and technical support for national agricultural development initiatives.
Continue to enhance agricultural information systems. Although Montenegro already boasts fairly advanced platforms, there is still room for improvement. Specifically, the government of Montenegro should explore expanding the coverage of the LPIS, ensuring its implementation across the entire territory. The system itself should be updated with new orthophotographs to enhance the precision of mapping field boundaries and ultimately improve land registration and land use planning.
References
[7] European Commission (2023), Income Support Explained, https://agriculture.ec.europa.eu/common-agricultural-policy/income-support/income-support-explained_en#:~:text=Payments%20are%20at%20least%20EUR,EUR%20215%2Fha%20in%202027 (accessed on 24 January 2024).
[9] European Commission (2023), Montenegro Report 2023, https://neighbourhood-enlargement.ec.europa.eu/montenegro-report-2023_en (accessed on 5 February 2024).
[5] European Commission (2022), IPARD III Programme 2021-2027 of Montenegro, https://agriculture.ec.europa.eu/document/download/27ac30d8-a069-4d8b-9cd2-e9c09ba94c93_en?filename=ipard-III-programme-montenegro-2021-27_en.pdf (accessed on 5 February 2024).
[3] FAO (2023), Montenegro Prioritises Better Natural Resource Management and Inclusive Rural Development, https://www.fao.org/europe/news/detail/fao--montenegro-prioritize-better-natural-resource-management-and-inclusive-rural-development/en#:~:text=Agriculture%20in%20Montenegro&text=It%20is%20estimated%20that%20about,dependent%20on%20the%20tourism%20sector. (accessed on 2 February 2024).
[8] Government of Montenegro (2023), Report on the Work and Situation in the Administrative Areas of the Ministry of Agriculture, Forestry and Water Management and Administrative Bodies for the year 2022 - Conclusions, https://www.gov.me/en/documents/89f2d5dd-7d70-4318-aef1-88acd811e32e (accessed on 5 February 2024).
[6] Government of Montenegro (2021), Third Biennial Update Report of Montenegro to the United Nations Framework Convention on Climate Change, https://unfccc.int/sites/default/files/resource/BUR3_Montenegro%20-%2024.%20Jan%20-%20FINAL.pdf (accessed on 5 February 2024).
[10] OECD (2021), Building Agricultural Resilience to Natural Hazard-induced Disasters: Insights from Country Case Studies, OECD Publishing, Paris, https://www.oecd-ilibrary.org/agriculture-and-food/building-agricultural-resilience-to-natural-hazard-induced-disasters_49.
[2] SWG (2023), Draft Technical Report on Agriculture and Rural Development Policies in the Western Balkans.
[4] WBIF (2023), Kick-off for Montenegro Broadband Infrastructure Development Technical Assistance Project, https://www.wbif.eu/news-details/kick-montenegro-broadband-infrastructure-development-technical-assistance-project (accessed on 5 February 2024).
[1] World Bank (2024), World Development Indicators, DataBank, https://databank.worldbank.org/source/world-development-indicators (accessed on 6 February 2023).
Notes
← 1. This average was calculated using data from the World Bank’s World Development Indicators for all economies except Kosovo whose data came from Eurostat (found here: https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Enlargement_countries_-_agriculture,_forestry_and_fisheries_statistics).
← 2. This figure is based on the responses provided in the questionnaire conducted in 2022.
← 3. The Strategy for the Development of Agriculture and Rural Areas can be accessed at: www.gov.me/dokumenta/1e9c16c3-8814-49ab-ba89-de4f60f796af.
← 4. LEADER is a local development method that has been used for 30 years to engage local actors in the design and delivery of strategies, decision making and resource allocation for the development of their rural areas – https://ec.europa.eu/enrd/leader-clld_en.html.
← 5. Financial resources were judged to be insufficient by stakeholders in the government of Montenegro, according to the inputs collected in the CO 2024 qualitative questionnaire.
← 6. The Law on Water can be accessed at https://leap.unep.org/en/countries/me/national-legislation/water-law.
← 7. The three EU CAP objectives are: increasing competitiveness, supporting generational renewal, and ensuring vibrant rural areas.
← 8. The Law on Protection from the Negative Effects of Climate Change can be found at: www.gov.me/dokumenta/6cdd3d40-535d-4215-a803-83669fe8ed15.
← 9. MIDAS is a Horizon Europe Innovation Action aimed at developing and implementing innovative solutions for growing crops and building sustainable value chains.
← 10. This regulation can be accessed at www.fao.org/faolex/results/details/en/c/LEX-FAOC156957.
← 11. Law on Quality Schemes (Official Gazette of Montenegro, No. 22/2017).