Subsidising tobacco growing in North Macedonia: policy at a crossroads.

BACKGROUND

North Macedonia consistently provides substantial direct subsidies for tobacco cultivation despite its commitments under the WHO Framework Convention on Tobacco Control and aspirations to align with the European Union's Common Agricultural Policy. This study examines tobacco subsidies and their implications on production trends, farmer behaviour and policy alignment.

METHODS

This study applies descriptive analysis to assess the economic significance of tobacco farming and subsidies and correlation analysis and Interrupted Time Series Analysis to estimate the relationship between production and financial incentives (price and subsidies). The study also draws on survey results to understand farmer attitudes towards tobacco growing and subsidies.

RESULTS

Tobacco remains North Macedonia's most subsidised crop, receiving around 40% of crop-related support. While subsidies appear to sustain production and significantly supplement farmer income, cultivated area and farmer participation are declining. Survey results provide further support that subsidies influence farmer behaviour and that without them most farmers would quit tobacco farming.

CONCLUSION

North Macedonia allocates substantial public funds to tobacco subsidies aimed to support rural households and promote its valuable agricultural export, but this may not be the most economically prudent use of national resources. A strategic transition plan is essential to align agricultural policy with international commitments and health and sustainability goals. This includes measures for diversification and transition towards viable alternatives along with phased decoupling of subsidies. Successful implementation of reforms would be facilitated with farmer support for alternative livelihoods, a clear timeline of measures, stronger institutional capacity and investment in sustainable rural development.