What is the role of the agri-food sector in the national economy of North Macedonia?

Agriculture (traditionally) and industry are the two most important sectors in the economy of the RNM. The agricultural sector plays a key role in the successful implementation of structural reforms in the country due to its social role in ensuring food security and stable income. Without diminishing or losing its important role, the share of the agricultural sector in the total GDP (both nominal and real) has remained relatively stable—contrary to the experience of most transition economies.

The stable share of agriculture in the national GDP is due to the moderate increase in the sector’s growth, but also to the substantial decline in activity in the industrial sector and the overall GDP drop. Given the reduced activity in industry, agriculture served as a buffer for the socioeconomic and structural changes in the industry and other sectors of the economy.

What is the current state of the agriculture and rural development sector?

The EU’s Common Agricultural Policy supports farmers and guarantees food safety across Europe. It helps address climate change and promotes sustainable management of natural resources; it sustains rural areas and landscapes across the EU and keeps rural economies alive by promoting jobs in agriculture, the agri-food industry, and related sectors. This requires strong systems of management and control. There are also common EU rules on marketing standards, quality policy, and organic farming.

Regarding horizontal issues, North Macedonia is in the early stages of preparing for sustainable agriculture. Government reforms to the direct subsidy system in 2023 have strengthened the link between support and production. The drafting of a new law on agriculture and rural development has been postponed. North Macedonia must align its agricultural support policy with EU legislation, especially concerning the use of agri-environmental measures.

All elements of the Integrated Administration and Control System (IACS) have been established in line with EU legislation. Data transfer and interoperability between different elements need to be ensured, along with verification of data accuracy. Progress has been made in acquiring orthophoto (aerial) imagery to facilitate updates to the Land Parcel Identification System (LPIS). The farmer registry and LPIS still need to be transferred to the Аgriculuture Support Agency. No progress has been made in developing real-time interoperability with animal identification and registration systems (animal ID) due to data quality issues.

In the area of the Farm Accountancy Data Network (FADN), sample expansion has improved representativeness. However, additional resources are needed to expand the FADN system and include data on environmental and social sustainability in line with the EU’s new Farm Sustainability Data Network (FSDN).

A new law on advisory services has been adopted, providing a legal framework for developing advisory services for agricultural products in accordance with EU legislation.

Regarding rural development, implementation of IPARD III began with two project calls, while progress is also being made on finalizing the IPARD II program. However, to ensure consistency, attention must be paid to the capacity and retention of personnel in IPARD bodies, especially the IPARD Agency. Particular attention is needed to reduce delays in payments to applicants.

Progress has been made in the area of quality policy with the adoption of the Law on Wine. The legislative framework, including for alcoholic beverages, still needs to be fully aligned with EU legislation. Administrative capacity and resources remain insufficient despite growth prospects.

As for organic farming, a new law on organic agriculture is still pending adoption, which would further align with EU legislation. Activities to improve monitoring and control of organic certification and traceability of organic products must be strengthened, along with efforts to develop the sector through better utilization of support under the IPARD III program.

What is the situation regarding food safety, as well as veterinary and phytosanitary policy?

EU food legislation, including hygiene rules for food production, ensures a high level of safety for food and animal feed and a high level of consumer protection. Animal health and welfare, food safety of animal origin, seed quality, plant protection materials, protection from harmful organisms, and animal nutrition are all safeguarded.

Regarding overall food safety, amendments to the Law on Food Safety have been adopted. A new law on official controls has been drafted but not yet adopted. The national rapid alert system for food and feed, and the internal audit and training systems of the Food and Veterinary Agency, continued. The agency conducted regular audits of accredited laboratories in the fields of veterinary and food safety and continued its work in line with quality management standards in most areas. However, risk-based approaches and the principle of transparency must be applied to all official control systems and be adequately funded.

In terms of phytosanitary policy, a new Law on Plant Health aimed at aligning with the new EU legislation has yet to be adopted. The Phytosanitary Authority regularly updated the list of harmful organisms in accordance with the EU acquis and the pest status in the country. A phytosanitary monitoring program was implemented, and the phytosanitary information system was further developed. Secondary legislation on training in phytopharmacy, phytomedicine, and the sustainable use of plant protection products has been adopted. However, measures for the sustainable use of pesticides have not been implemented.

According to the EU’s Rapid Alert System for Food and Feed (RASFF), EU member states reported findings of unauthorized chemicals in several shipments of vegetables, indicating inadequate pesticide control in the country. Significant work is still needed to collect reliable data on national pesticide use and its impact on human health. The law on genetically modified organisms is not fully aligned with the EU acquis.

What are the export potentials of the agri-food sector? Can domestic companies compete on EU and other regional markets?

Agribusiness is one of the most promising sectors in North Macedonia. Agribusiness (including agriculture, forestry, and fisheries) accounted for 7.1% of GDP (2021 data), 9% of total trade (2022 data), and 10% of total employment in the country (2022 data).

In 2022, the export of agricultural and food products accounted for 8.6% of North Macedonia’s total exports and 9.4% of total imports. The main markets for agricultural and food products are the EU (50.5% of total exports) and CEFTA countries (32%). The main agricultural export products from North Macedonia are tobacco, wine, vegetables (fresh and preserved), fruits, and lamb.

The European Union also supplies about 46% of North Macedonia's total agricultural imports. Major imported agricultural products include: raw meat, milk and dairy products, cereals, sunflower oil, fruits and vegetables, and processed food. Trade in agricultural products between our country and the U.S.A. decreased from USD 37.2 million in 2021 to USD 30.5 million in 2022. Compared to 2020, the U.S.A. share in North Macedonia's agricultural imports dropped by nearly 0.5%, to 1.03% of total imports, while the share of North Macedonian agricultural exports to the U.S.A. decreased from 3.9% to 3.7%. Tobacco remained the biggest export product to the U.S.A. (11% of total tobacco exports), while tree nuts were the largest imported product.

The food and beverage processing sector, including the processing of fresh fruit and vegetables, is a significant segment in North Macedonia. Processed food includes semi-finished products (frozen, dried, and concentrates) and ready-to-eat products (canned). More than 75% of processed food is exported, mainly to the EU and neighboring countries. Most food processing facilities are privately owned companies.

The National Strategy for Agriculture and Rural Development 2021–2027 aims to strengthen the capacity of North Macedonia's agricultural sector to compete in the EU and other regional markets, promote sustainable and balanced rural development, and retain the young population by creating better living conditions. Key strategic goals include improving competitiveness, economic sustainability, and income through enhancing food supply security and strengthening the market orientation of the sector.

The strategy also focuses on technology and digitalization, the adoption of sustainable environmental practices to mitigate and adapt to climate change, and attracting young farmers. Accordingly, the total agriculture budget (including financial support for agricultural development and subsidies for farmers) increased from USD 49.3 million in 2007 to USD 211 million in 2022, representing approximately 3.14% of the national budget. Around 4.9% of the agriculture budget (USD 106 million in 2021) was used for support and direct payments for agricultural production and rural development.

A persistent problem in our agriculture is the fragmentation of farmland into many small plots—over 55% of the plots are between 2 and 5 hectares, and only 0.14% of farmers hold 50 hectares or more.

Which sectors in North Macedonia’s agri-processing industry are considered leaders? What are the potentials and weaknesses of the other sectors?

Wine production, along with viticulture, contributes 17–20% of North Macedonia’s gross agricultural output. In addition, wine ranks first in the export of alcoholic beverages and second, after tobacco, in total agricultural export value. North Macedonia has nearly 30,000 hectares under vineyards, 85% of which are wine grapes, and the rest are table grapes. Total annual wine production is between 1 and 1.1 million hectoliters, from 81 wineries, and around 1 million hectoliters of beer, mostly for domestic consumption.

With over 85% of wine sold in foreign markets, wine is a strategic export for the country. Around 65% of wine exports are in bulk, and a smaller portion is bottled. Amendments to the Law on Wine in 2019 eased registration requirements for small/family wineries, leading to a rapid increase in their number. In 2022, total wine exports reached 665,500 hl (around 60% of total production), with a 3.4% volume decrease and an 18% increase in value compared to 2021. Major export markets include the EU and Western Balkans, with some exports to China, Canada, Japan, and the U.S.A. There are export opportunities for U.S.A. companies in equipment that can increase the volume of bottled wine in North Macedonia, as well as technology and materials to stimulate new grape varieties and modernize vineyards.

In September 2023, the Government adopted a ten-year National Strategy for the Development of Viticulture and Winemaking (2023–2033), identifying key priorities such as sector modernization, increasing wine exports from North Macedonia, developing wine tourism, and implementing climate change adaptation measures to ensure sustainability and preserve vineyard biodiversity.

Tobacco is the most important agricultural export product, accounting for nearly one-third of the total value of agri-food exports (28.7%). In 2022, tobacco was once again the leading industrial crop, planted on nearly 80% of the total area under industrial crops. Almost all raw tobacco production is under contract with multinational companies through registered subsidiaries in the country and is exported as fermented tobacco. The largest export market is the EU, followed by the U.S.A., Indonesia, and Russia.

Organic agriculture is a growing sector. In the past three years, the size of arable land certified for organic production has increased due to greater government support. In 2022, 913 entities were registered for organic production in the country, covering 4,815 hectares. Organic farms mainly produce dairy products, meat (lamb, sheep, and goat), honey and other bee products, cereals, oilseeds, wine, fruit, and vegetables. The government co-financed 50% of organic certification costs.

About 46% of agricultural production in the country is fresh fruit and vegetables, mostly export-oriented. Production is concentrated in the southern and eastern regions due to favorable climate conditions. Over 75% of vegetable production is outdoors, 20% in plastic tunnels, and the rest in greenhouses. The most common vegetable crops are potatoes, peppers, and tomatoes; while the most common fruit crops are apples, plums, peaches, and pears, with walnut and hazelnut production also increasing in recent years.

North Macedonia’s food processing industry, which in value terms has surpassed wine exports, consists of 50 companies with a processing capacity of about 180,000 tonnes of fruit and vegetables per year. Processors primarily use domestic raw materials such as red peppers, industrial tomatoes, cherries, apples, and plums. However, interventions are still needed (in capacity, and stable yield and quality of raw materials) to increase the currently low volume of food processing in North Macedonia. In recent years, problems have emerged with the availability of skilled labor, access to finance, lack of sophistication among suppliers, high import duties on raw materials, etc. Establishing stable business relationships with reliable and efficient importers and distributors, with access to appropriate distribution and sales channels, is necessary.

The Government of North Macedonia considers agriculture a priority sector for future investments, growth, and development, including increased foreign direct investment. Although significant financial support for farmers has been provided over the past decade, the lack of modern equipment/technology and investment in processing facilities remains a key weakness of the agricultural sector.

It is also urgently necessary to introduce legal regulation to promote land consolidation, which would enable better use of agricultural machinery and serve as an effective tool for increasing agricultural production.

Domestic production of agricultural machinery remains minimal, and the market relies on imports. Providing new equipment for bottling, packaging, and refining would add value to the food processing sector and yield environmental benefits by enabling waste treatment and removal, improving hygiene, and meeting environmental standards in many industrial finishing processes.

The country still has insufficient meat production (except for pork), and the livestock population is declining. The domestic pork industry meets almost 90% of the demand for fresh meat, while all meat processing industries cover their needs through imports. As a net importer of meat, the country satisfies more than 50% of its meat consumption (fresh and processed meat). The poultry industry is focused on egg production, but meat production is insufficient to meet the local demand for fresh meat. There is also a shortage of beef, as most cattle in the country are dairy cows. Lamb is the only net-exported livestock product. About 85% of the lamb meat produced in the country is exported to EU countries.

We also import most of our grain needs. Domestic corn production does not meet the needs of local consumption, and we import one-third of our total wheat requirements. Soy needs are compensated by importing soybean meal from Serbia and Hungary or from the U.S.A. (via Greece and Bulgaria).

In 2013, North Macedonia amended its legislation to prevent the use of genetically modified products in animal feed and human food. However, the U.S.A. Embassy closely cooperated with the authorities to change the legislation and open the market in 2023.

Support continues under the 2025 Rural Development Financial Support Program for the economic association of agricultural holdings and the joint performance of agricultural activities. Agricultural cooperatives are eligible for financial support for the procurement of new fixed assets, as well as for operational costs related to the acquired assets. The maximum amount of eligible costs per beneficiary under this measure is 15,000,000 denars. Financial support is awarded in an amount of up to 90% of the total eligible value of the procurement (source: Ministry of Agriculture, Forestry and Water Economy, March 2025).

What are the biggest challenges facing the sector, and what opportunities exist for its growth?

In recent years, farmers, young students, and representatives of government institutions, civil society, academia, and the private sector have been continuously discussing the current state of digitalization in agriculture, with the goal of jointly developing concrete policy recommendations for sustainable progress.

North Macedonia has a strong foundation for digital transformation thanks to its robust digital public infrastructure. Key systems such as the data interoperability platform, digital identification, the national e-services portal, and digital registries provide a critical base to build upon. Leveraging these systems opens significant opportunities for the food and agricultural sector to benefit from digitalization.

The country has made notable progress in aligning its e-government systems with the European Union’s pre-accession requirements. However, several challenges remain. Improvements are needed in data collection and availability, as well as in system interoperability. Existing platforms need updating, key missing services must be introduced, and digital systems should meet the current needs of the agricultural sector.

Additionally, despite widespread internet access and ownership of digital devices, farmers in North Macedonia often face low levels of digital literacy. The adoption of digital technologies in agriculture remains limited, and addressing the barriers to adoption is essential for improving productivity, sustainability, and resilience in the sector.

To address these gaps, the FAO supported the Ministry of Agriculture, Forestry and Water Economy in conducting a comprehensive assessment of the current state of digitalization in the agri-food sector in North Macedonia. The assessment covers the country’s ICT infrastructure, regulatory frameworks, human capital and innovation ecosystem, the digital solutions market, existing government systems, and more. Based on this, policy recommendations will be developed in consultation with local stakeholders to guide the sector’s transformation.

Modernizing agriculture, alongside other sectors, is necessary and is a strategic and social priority. Digitalization offers powerful tools for enhancing competitiveness, sustainability, and the livelihoods of rural communities—tools that can help identify needs and offer digital solutions that are accessible and beneficial both to farmers and to the wider community.

Intensive work is being done to identify the challenges and opportunities for digital agriculture, with a focus on sustainable development, food security, and the adaptation of agri-food systems to climate change, aiming to formulate policies aligned with national development goals and the country's EU integration process.

The EU’s Digital Villages initiative, which aims to transform villages into smarter, greener, and digitally interconnected hubs, is already being implemented through real examples in several countries in the region, where the foundations for their introduction have been laid, while others are in the process of establishing their first digital villages (Albania, Azerbaijan, Bosnia and Herzegovina, Georgia, Kyrgyzstan, Tajikistan, Türkiye, and Uzbekistan). In our country too, there is a growing need to equip rural areas and populations to use digital technologies seamlessly, which would enable greater agricultural productivity and broader access to services. This would indirectly reduce the number of young people leaving the country and, under the new conditions, encourage them to remain and work in North Macedonia.

What is the role of education, science, and research?

Research, as well as educational and advisory systems, should stimulate mutual cooperation and provide feedback (developing appropriate content for information systems requires the use of available technical expertise), thus improving the timeliness and quality of the resulting outcomes.

It is necessary to empower farmers by providing relevant and up-to-date agricultural information on new production technologies and techniques for sustainable food security, crop diversification for improved farm profitability, and better marketing opportunities for agricultural products.

The advisory function must improve the quality of services provided to farmers. Information within the sector about technological innovations, as well as the results of field demonstration trials from research and educational institutions, should be easily accessible and presented through appropriate materials (web brochures with data, digital video presentations, podcasts with relevant experts—researchers). It is crucial to adapt this information and apply it in accordance with local conditions, as well as to increase both the number and accessibility of well-structured, specialized training sessions that address the identified needs from practice.

Increasing the capacities of universities in terms of staffing—the human factor—is extremely important for the functionality and effectiveness of research laboratories and for achieving established priorities.