Bulgaria: Effects Of EU Accession

By Scott C. Lucas|16 April 2007

A recent report from the US Department of Agriculture’s Foreign Agriculture Service (USDA-FAS) notes that the country’s local farming and food industries are likely to have limited access to EU funding during the first year of membership, and that domestic support for agriculture in 2007 is expected to be lower than in 2006 when the sector relied on national budget funds. At the same time, the sector will be exposed to significant competitive pressure from other EU member states, and local producers will need to adapt to the new safety and quality standards.

While the Bulgarian economy has grown over the last several years (a growth rate of 6.3% in 2006), the share of agriculture in Bulgaria’s GDP has declined (from 10.1% in 2003 to 8% in 2006). The sub-sectors with the highest contribution to the agricultural GDP are grains, oilseeds, tobacco, tomatoes, and grapes.

The production structure of the farming sector continues to represent a major challenge for Bulgaria, including in its potential to absorb EU funds. Some of the issues in the country are fragmented small agricultural holdings, rural unemployment and poverty, a low rural education level, insufficient modernization and marketing expertise, and an Underdeveloped rural infrastructure. Bulgaria’s market is composed of a large number of small farms and a few large enterprises. A recent survey reported 534 farms with an average of 5.4 hectares apiece, although 77% of farms cultivate less than 1 hectare each. Less than 1% of farms cultivate more than 1 hectare, and cover 76% of the total agricultural land.

Bulgari’s government has struggled to develop its ability to use EU funds efficiently, and expects that the absorption rate of total EU funding in 2007 will not exceed 20%. The main reason is underdeveloped administrative capacity and late accreditation of institutions and approval of strategic programs.

The total amount of EU funds under the National Strategic Referent Framework (NSRF) for 2007-2013 is 6.8 billion Euro, of which 2.6 billion Euro are from the agricultural funds.