Livestock Sector in Serbia: Challenges, Structural Gaps, and Strategic Pathways towards Sustainability

1. Introduction

Livestock production has historically been the backbone of food systems, providing high-value proteins and essential micronutrients critical for human nutrition and health (FAO, 2018a). Beyond its nutritional role, livestock contributes significantly to rural economies through employment opportunities and income generation, while also preserving cultural landscapes, culinary traditions, gastronomic heritage, and the cultural and historical identity of communities (FAO, 2018b). The European Union (EU) is among the world’s leading producers of animal-origin food, accounting for approximately 20% of global meat production and over 20% of global milk production, with livestock representing around 40% of total agricultural output value in the EU (EUROSTAT, 2020). This sector plays a central role in ensuring food security and maintaining a positive agri-food trade balance, which reached a €58 billion surplus in 2022, driven largely by dairy and meat exports (EC, 2025).

However, despite its global significance, the EU livestock sector faces structural challenges, including a gradual decline in herd sizes. For example, the total cattle population decreased from 78 million in 2013 to approximately 71,86 million in 2024. The number of pigs in EU has shown a gradual but persistent decline from 141,859 in 2013 to 132,136 in 2024 (EUROSTAT, 2025). This decline is primarily driven by changing consumer preferences towards plant-based diets and evolving consumer preferences away from red meat, environmental concerns related to greenhouse gas emissions, rising production costs, stricter animal welfare regulations, and outbreaks of African Swine Fever (ASF) (EC, 2024). In response, the EU is implementing targeted measures to revitalise the sector, such as supporting eco-schemes within the Common Agricultural Practice (CAP) 2023–2027 framework, promoting precision livestock farming and digitalisation, strengthening producer organisations, and incentivising young farmers to enter animal production. These measures are embedded within the EU’s broader Vision for Agriculture and Food, which builds upon the CAP framework to ensure that agriculture remains a strategic, competitive, and future-proof sector by focusing on sustainability, innovation, and rural resilience (EC, 2025). These EU measures reflect a broader understanding that the future of agriculture depends on its capacity to integrate sustainability principles into all production systems.

In this context, the concept of sustainable agriculture becomes particularly relevant. Sustainable agriculture is understood as an approach that is economically viable, environmentally friendly, and socially acceptable (Velten et al., 2015). Economic sustainability implies that only agricultural production which is market-oriented and economically justified can endure in the long term. Environmental sustainability requires preserving natural resources for future generations while protecting or enhancing ecosystems affected by agricultural activities, thus viewing agriculture as an ecosystem management system based on the soil–plant–animal–human balance. Social sustainability involves fulfilling broader societal values, including a high quality of life for farmers and rural communities, while preserving cultural heritage and traditions. Furthermore, agriculture must be multifunctional, contributing to environmental protection and biodiversity, ensuring food security and safety, and supporting rural economic development through economic growth, diversification, and the maintenance of socially vibrant rural settlements (Çakmakçı et al., 2023).

Similarly, Serbia’s livestock sector has been experiencing a prolonged decline, with national data showing significant reductions in cattle and pig numbers over the past two decades (SORS, 2025a; Grujić Vučkovski, 2022). While in the EU this decline is primarily driven by market-related and environmental factors, in Serbia it largely stems from systemic challenges within the agricultural sector (SORS, 2025a). Currently, livestock contributes only ~30–35% of Serbia’s agricultural gross value added (GVA), compared to 40–60% in EU countries, highlighting structural disparities (SORS, 2025a). Contributing factors include fragmented farm structures, technological stagnation, underdeveloped genetic improvement programs, and demographic decline in rural areas (Aničić et al., 2025; SORS, 2025a). Productivity and competitiveness are further constrained by delays in aligning with EU standards for product quality, environmental sustainability, and biosecurity (Aničić et al., 2025; SORS, 2025a). Limited adoption of innovative technologies – such as artificial intelligence, precision livestock farming, and IoT-based monitoring – restricts efficiency and adaptation to market and climate demands (Bošković et al., 2023; Stanković et al., 2024). Unlike the EU, where comprehensive strategies and investments are being deployed to counter these negative trends, Serbia lacks effective policies and sufficient financial mechanisms to revitalise its livestock sector and achieve sustainable production levels that ensure national self-sufficiency in animal-derived food.

Therefore, this study aims to analyse the economic drivers behind the sector’s decline, identify structural, technological, and policy determinants, and propose strategic recommendations for revitalising livestock production and enhancing its sustainability in line with EU priorities. Such timely insights are essential for ensuring food security, strengthening rural development, and facilitating Serbia’s integration into the EU market within an increasingly climate-challenged and competitive agri-food system.

2. Materials and Methods

The methodological framework of this paper is based on a comprehensive analysis of quantitative economic data relevant to the livestock sector in Serbia (SORS, 2025b). The following data sources were utilized:

National statistical databases, including the Statistical Office of the Republic of Serbia (SORS), for data on livestock numbers, production volumes, and agricultural output.

Economic Accounts for Agriculture (EAA), harmonized with the System of National Accounts (UN, 2009), are used to assess the contribution of livestock production to the gross value added of the agricultural sector.

International databases, such as Eurostat and Trademap.org (ITC, 2025) for comparative data on livestock production, yields, trade flows, and agri-food export/import balances.

Macroeconomic indicators from the National Bank of Serbia (NBS, 2025) and the International Monetary Fund (IMF, 2025) reports, including inflation rates and average annual exchange rates.

To ensure analytical consistency, all monetary values were deflated to real terms using 2013 as the base year. The reliability and relevance of these data sources are affirmed through their alignment with EU methodologies and international statistical standards. Additionally, a simple linear regression model was employed to evaluate the relationship between agricultural imports and macroeconomic variables, particularly domestic food price growth and exchange rate fluctuations. Variables were log-transformed to address differences in scale and interpret elasticity coefficients.

2.1. Literature Review and Keywords

To support this analysis, a comprehensive literature review was conducted to identify peer-reviewed studies examining livestock production systems, economic performance, competitiveness, and sustainability in Serbia and EU countries. The search spanned major scientific databases, indexing services, and publisher platforms, including PubMed, Scopus, Web of Science, Google Scholar, CAB Abstracts, Wiley Interscience, Springer/Kluwer, Science Direct, and Taylor & Francis Online, covering the period 2012 to 2025.

Keywords used included: “livestock production Serbia,” “agricultural economics,” “farm profitability,” “Economic Accounts for Agriculture (EAA),” “agri-food competitiveness,” “dairy sector productivity,” “climate change agriculture Serbia,” “animal welfare,” “biosecurity,” “AI in livestock production,” “agrarian policy Serbia,” “rural demography,” “food security,” and “sustainable food production.”

Over 50 peer-reviewed papers, national reports, and policy documents were analyzed to identify systemic weaknesses, structural challenges, and potential policy interventions required to revitalize the Serbian livestock sector and align it with EU standards of economic performance, sustainability, and food system resilience.

3. Present Situation in Livestock Production in Serbia

The Serbian livestock sector has experienced significant structural shifts over the past two decades (Petrović et al., 2015). Analysis of recent data (Figure 1 and Figure 2) reveals a continuous decline in livestock numbers across major categories. For example, cattle herds decreased from approximately 1,056 thousand heads in 2007 to 699 thousand in 2024, while pig numbers fell from 3,429 thousand to 2,349 thousand in the same period (SORS, 2025a). Sheep herds have remained relatively stable at around 1,759 thousand heads, whereas poultry numbers have grown moderately (14774), driven primarily by intensive production systems (Aničić et al., 2025; Vukoje et al., 2022). According to the Statistical Office of the Republic of Serbia (SORS, 2025a), as of December 1, 2024, compared to the same date in 2023, the total number of cattle decreased by 3.7%, while the number of pigs increased by 9.7%, sheep by 2.5%, and poultry by 3.5%. Regionally, cattle are predominantly raised in the Šumadija and Western Serbia region (accounting for 45.6% of the national herd), whereas pig farming is concentrated in the Vojvodina region (43.7% of the national pig population). When viewed in the context of the ten-year average (2014–2023), the structural decline becomes even more evident. The total number of cattle has decreased by 19.5%, pigs by 18.4%, and poultry by 7.0%, while only the sheep population has recorded a modest increase of 3.0%. These figures reflect a long-term contraction in herd sizes and a reorientation of production structures that continues to shape the Serbian livestock sector’s trajectory.

These changes are reflected in production outputs. In Table 1, data indicate that production of meat, milk, and eggs has generally stagnated or declined over the past decade, despite periodic fluctuations. Beef and pork outputs remain below their 2013 levels, and milk production has shown only limited increases, insufficient to reduce the productivity gap compared to EU averages (Vukoje et al., 2022). These trends indicate a deepening structural crisis in livestock production, exacerbated by limited technological advancement and insufficient policy support (Anđelković et al., 2024). However, a comprehensive understanding of this decline also requires reflection on the historical context. Data from the socio-metabolic study of Yugoslavia indicate that livestock populations in the region began declining as early as the 1980s, continuing throughout the post-conflict period and reflecting structural and institutional disruptions (FAOSTAT, 2024). This long-term downward trend in livestock numbers was further exacerbated by the economic marginalisation of agriculture in the post-socialist period, as investments were disproportionately directed toward industrial sectors. Despite Serbia’s favourable natural and climatic conditions—particularly in regions like Vojvodina and parts of Central Serbia—agriculture was pushed to the margins of economic development, lacking adequate public investment (Madžar, 2021). While the disintegration of the SFRY and the post-transition restructuring explain much of the sector’s initial decline, a comprehensive understanding must also consider the evolving global and domestic challenges that have continued to shape livestock production in Serbia. Multiple global and domestic factors have contributed to these negative trend.

3.1. Global Factors

Climate change has emerged as a critical constraint, with more frequent droughts and heat stress events reducing pasture productivity and feed crop yields, thus undermining farm economic viability (FAO, 2022). Outbreaks of animal diseases, such as African Swine Fever and Avian Influenza, have periodically curtailed production capacity and disrupted trade flows (Stanković et al., 2024). Additionally, geopolitical tensions, particularly the conflict in Ukraine, have destabilized global grain and energy markets, leading to higher feed and input costs for Serbian farmers (Aničić et al., 2025). Energy price volatility, including fuel, fertilizer, and electricity costs, has further increased production expenses and narrowed profit margins (Novaković et al., 2025).

3.1. Domestic Factors

Demographic decline in rural areas, driven by outmigration and population ageing, has reduced the agricultural labor force and accelerated farm closures (Aničić et al., 2025). Farm structures dominated by small, extensive holdings with limited investment capacity continue to constrain modernization and efficiency improvements. Moreover, despite the availability of EU IPARD funds, many farmers face administrative barriers and lack the capacity to develop eligible projects (Radović et al., 2024). As highlighted by Marković and Simonović (2025), inadequate agricultural policy frameworks and rigid subsidy criteria weaken the sector’s market orientation and sustainability prospects. Furthermore, reductions in milk premiums and limited effectiveness of direct support measures, as discussed by Đurić et al. (2019), have further undermined the income stability and competitiveness of dairy producers.

Underdeveloped rural infrastructure—including insufficient livestock markets, slaughterhouses, and cold storage facilities—weakens value chains and limits market access, particularly for smallholders (Anđelković et al., 2024). Macroeconomic imbalances, with cumulative inflation exceeding 130% between 2007 and 2023 and only modest exchange rate adjustments (+17%), have eroded purchasing power parity and diminished the competitiveness of domestic products relative to imports (IMF, 2025; NBS, 2025).

Taken together, these global and local pressures have created a livestock sector characterized by declining productivity, weak competitiveness, and limited resilience. As Bešić et al. (2024) emphasize, addressing these challenges will require a comprehensive approach encompassing structural modernization, farm consolidation, targeted policy reforms, and strategic investments in innovation, genetic improvement, and climate adaptation. Such measures are essential to prepare the sector for alignment with upcoming analyses of its economic contributions, discussed in the following section.

3.3. Economic Accounts for Agriculture in Serbia

Economic Accounts for Agriculture (EAA) provide an essential framework for evaluating the structural performance and policy outcomes of livestock production in Serbia. Between 2007 and 2023, data indicate that while nominal agricultural gross value added (GVA) increased, real growth adjusted to constant 2007 prices remained minimal, signaling persistent economic stagnation within the sector (SORS, 2025). The following Table 2 presents a summary of Serbia’s agricultural economic accounts for the period 2013 to 2023, illustrating trends in gross value added and highlighting the relative contribution of livestock production to the overall agricultural sector. These data provide a basis for assessing structural strengths and weaknesses, as further discussed below.

Analysis of Table 2 shows that agriculture accounts for approximately 6.8% of Serbia’s national GDP. However, within this sector, livestock production remains structurally weak. Its share of agricultural GVA consistently falls below 35%, significantly lower than the EU average of 60–70% (SORS, 2025; Anđelković et al., 2024). This underscores livestock’s declining contribution to national economic output and highlights fundamental limitations in competitiveness, productivity, and sustainability. Key factors shaping these EAA trends include:

• Strategic and structural factors

The absence of a comprehensive livestock development strategy aligned with EU CAP Strategic Plans and the Green Deal continues to limit sectoral transformation (Aničić et al. 2025). Farm fragmentation remains widespread, with production dominated by small-scale holdings of limited economic viability and market orientation (Radović et al., 2024). Additionally, agricultural policies and subsidy frameworks often fail to incentivize livestock-specific investments, constraining development opportunities (Đurić et al. (2019).

• Technological factors

Technological modernization remains insufficient, with outdated housing systems and limited uptake of innovations such as precision livestock farming technologies, artificial intelligence, IoT, and robotics (Bešić et al., 2024). Consequently, productivity remains below EU benchmarks; for instance, average milk yield per cow in Serbia is 3,500–4,500 L/year compared to over 7,000 L in EU countries (Radišić et al., 2021).

• Economic and financial factors

Low profitability characterizes both farms and agri-food SMEs, primarily due to high indebtedness and poor liquidity (Aničić et al. 2025; Radišić et al. 2021). Although IPARD funds offer opportunities for investment and modernization, their utilization remains limited, with less than 50% of applications implemented successfully (Radović et al., 2024). Macroeconomic pressures, including cumulative inflation exceeding 130% (2007–2023) alongside a relatively stable exchange rate, have reduced the competitiveness of domestic livestock products relative to imports (SORS, 2025; NBS, 2025).

• Market organization and branding

Weak organization of livestock markets persists, with few producer groups or clusters to strengthen domestic and export competitiveness (Marković & Simonović, 2025). Furthermore, the sector underutilizes geographical indications and traditional branding, limiting product differentiation and added value (Anđelković et al., 2024).

• Biosecurity and animal health

Biosecurity protocols and veterinary monitoring systems remain insufficient, constraining export potential and sector resilience to disease risks (Stanković et al., 2024).

• Climate and environmental factors

Climate change continues to reduce forage yields and pasture productivity, threatening economic sustainability (FAO, 2022). Limited adaptation strategies to droughts and heat stress further exacerbate these vulnerabilities adoption of climate change (Županić et al., 2021).

• Demographic factors

Rural depopulation and an ageing farming population continue to erode labor availability and limit capacity for innovation and digital transformation (Anđelković et al., 2024).

These trends should also be evaluated in the context of the European Commission’s CAP strategic indicators, which emphasize fair income distribution, generational renewal, rural vitality, and improved environmental performance as pillars of long-term economic viability of livestock farming (EC, 2025). Although Serbia is not yet an EU member state, its alignment with these CAP principles is essential to ensure sustainable transition and competitiveness in the regional market.

In addition to these structural, technological, and demographic constraints, macroeconomic factors further influence the competitiveness and sustainability of Serbia’s livestock sector. One such dimension is the indicative exchange rate of the dinar against the euro, which estimates the rate necessary to maintain purchasing power parity between domestic and foreign currencies, taking into account relative inflation rates in Serbia and the Eurozone. For the end of 2024, the indicative exchange rate is calculated at 156.3 dinars per euro, significantly higher than the official rate, indicating a real appreciation of the dinar. This appreciation reduces the competitiveness of domestic production relative to imports, as EU products become relatively cheaper on the Serbian market. To better understand the influence of macroeconomic variables on agri-food import volumes, a regression model was applied to quantify the relationship between domestic food price changes, exchange rate fluctuations, and import levels (Milićević, 2025). The regression equation is:

Y = 0.132 + 0.207 Ln(price) – 0.602 Ln (exchange rate)

Standard errors: (0.027) (0.034) (0.549)

t-statistics: (4.841) (1.057) (-3.081)

R = 0.625; F-statistic = 5.127; DW = 2.464

where:

Y represents the logarithm of imports,

Ln(price) is the logarithm of domestic food prices,

Ln(exchange rate) is the logarithm of the exchange rate.

These findings demonstrate that an increase in domestic food prices positively affects import volumes, while an appreciation of the dinar (reflected in a higher indicative exchange rate) has a positive effect on import competitiveness but negatively affects exporters’ competitiveness. Analysis indicates that each 1% increase in domestic food prices, with a stable exchange rate, leads to a 0.2% rise in import volumes. Conversely, each 1% appreciation of the exchange rate results in a 0.6% increase in imports. These two variables, having opposite direct effects, simultaneously influence the overall import balance. When both variables change concurrently, their effects on import growth are multiplied, further amplifying their combined impact. This macroeconomic environment, combined with structural weaknesses identified earlier, further constrains the profitability and sustainability of livestock production, highlighting the need for integrated policy measures to improve sector resilience and competitiveness.

3.4. Strategic Recommendations for Sustainable Livestock Competitiveness

Recent global research underscores that technological transformation, strategic economic management, and integrated policy frameworks are fundamental drivers of sustainability within the livestock sector. Across leading livestock economies, the adoption of artificial intelligence (AI), robotics, precision feeding, and climate-smart breeding has resulted in substantial improvements in productivity, animal welfare, and environmental performance. For example, studies have shown that AI-enabled diagnostics, precision feeding systems, and reproductive monitoring significantly enhance both efficiency and welfare outcomes, as confirmed by Hossein-Zadeh (2025). These technologies have been widely implemented in emerging livestock economies such as China (Zhang et al., 2024) and India (Ali, 2023), underpinning notable gains in operational resilience and sustainability.

Within the European Union, countries such as the Netherlands and Denmark have extensively integrated intelligent systems, real-time sensor networks, and big data analytics into livestock production. Wolfert et al. (2017) highlight that such smart farming approaches not only improve productivity and economic efficiency but also strengthen biosafety measures, reduce antibiotic use, and promote higher standards of animal welfare, thereby supporting the integrated One Health framework that links animal, human, and environmental health outcomes. Additionally, Munz et al. (2020) note that the adoption of Farm Management Information Systems (FMIS) in European dairy farms supports strategic decision-making, facilitates productivity benchmarking, and promotes comprehensive digital farm management.

Supporting these findings, Goller et al. (2021) emphasise that successful digitalisation requires continuous farmer education, development of advanced data interpretation skills, and transformation of advisory services to provide targeted support for digital tool adoption. Verdouw et al. (2019) similarly outline how big data and IoT technologies enable real-time monitoring of animal health, nutrition, and biosecurity parameters but stress that infrastructural investments and platform standardisation are necessary for widespread adoption, particularly among smallholder farms. Mukhamedova et al. (2022) argue that interoperable platforms, open data systems, and standardised digital infrastructures are critical for effectively integrating small farms into broader national and regional digital ecosystems, while Schwering et al. (2022) highlight that AI and digital technologies can deliver significant productivity and welfare improvements only if supported by robust farmer training and education policies.

Technological modernisation also includes robotics, as demonstrated by Ozentürk et al. (2022), who report that automation in poultry production has improved feed efficiency and biosecurity, indicating potential for similar applications in other livestock subsectors. In addition to technological solutions, climate adaptation strategies are essential. Adesogan et al. (2025) emphasise practices such as heat stress mitigation, improved feed conversion efficiency, and genetic selection for resilience, which have been successfully implemented in South Asia and sub-Saharan Africa to maintain economic viability under rising climate risks. Complementing these insights, Katsini et al. (2024) note that dairy sectors in Mediterranean countries have invested in advanced ventilation technologies and thermal tolerance breeding to sustain milk production despite increasing temperatures.

Finally, strengthening economic management remains vital. Langemeier (2016) highlights that in the United States, implementing formal benchmarking frameworks using indicators such as Earnings Before Interest, Taxes, and Amortisation (EBITA), operating profit margins, and return on assets has improved strategic planning, operational efficiency, and competitiveness. However, the absence of such systems in Serbia limits evidence-based advisory services and constrains sector-wide performance optimisation.

Despite the availability of these proven global models, the Serbian livestock sector remains hampered by outdated infrastructure, low levels of digital adoption, and the absence of cohesive strategic frameworks. Bridging these gaps will require comprehensive reforms that integrate economic benchmarking, technological modernisation, targeted farmer education (Tolimir et al. 2025), climate adaptation strategies (Kovačević et al. 2024), and robust alignment with EU Green Deal objectives to secure long-term competitiveness and sustainability (Milic et al. 2020). In line with the European Commission’s Strategic Plan for Agriculture and Rural Development, Serbia should establish a national-level Agricultural Knowledge and Innovation System (AKIS) that supports farmer education, data-driven management, and the adoption of smart farming technologies. These systems are central to the EU's approach to resilient and modern livestock production (Madžar, 2021), and their development is critical to facilitating knowledge transfer and innovation diffusion.

Historical perspective offers valuable insights into how effective strategic planning and institutional coordination once positioned Serbia as a regional leader in livestock exports. During the export boom of the former SFRY, Serbia leveraged a combination of forward-looking market intelligence, rapid adoption of state-of-the-art technologies, and a unified national export identity. Key drivers of this success included standardized veterinary-sanitary protocols tailored to the specific needs of high-value markets, centralized quality control systems, and strict compliance with hygiene and infrastructure requirements. These strengths not only enabled market access but also established Yugoslav “baby beef” and lamb as high-quality products on the European market.

Today, Serbia lacks such cohesive strategic coordination and market alignment. While global and EU frameworks for sustainable livestock systems are increasingly built around innovation ecosystems and public-private collaboration, Serbia continues to operate within fragmented institutional structures, underutilized expert capacities, and insufficiently responsive support policies. Learning from this historical legacy is crucial—not as a call for return, but as a foundation for designing modern, market-oriented interventions that restore competitiveness and resilience in livestock production.

Therefore, to effectively design such integrated reforms and prioritise interventions, it is crucial to systematically assess the sector’s current internal and external environment. The following SWOT analysis provides a structured overview of internal strengths and weaknesses alongside external opportunities and threats affecting the livestock sector. Its purpose is to guide strategic decision-making by linking sector capacities with potential development pathways while identifying risks that must be mitigated.

The SWOT analysis provides a structured overview of internal strengths and weaknesses alongside external opportunities and threats affecting the livestock sector. Its purpose is to guide strategic decision-making by linking sector capacities with potential development pathways while identifying risks that must be mitigated. In the context of Serbian livestock production, the SWOT analysis (Table 3) highlights the urgent need to build on existing strengths, such as traditional expertise and favourable agro-climatic conditions (Madžar, 2021; Radović et al., 2019), while addressing structural weaknesses like farm fragmentation and low technological adoption. At the same time, opportunities such as EU market integration and technological modernisation should be actively pursued to counter threats from climate change, rural depopulation, and market competition. Based on these insights, priority actions should focus on modernising production systems, enhancing farmer education and organisation, improving biosecurity and animal welfare standards, and supporting demographic revitalisation to ensure a resilient and competitive livestock sector that contributes sustainably to national food security and rural development.

4. Conclusions

The analysis confirms that Serbia’s livestock sector is under prolonged structural and economic pressure, with declining animal numbers, low productivity, and reduced competitiveness. Overcoming these challenges requires a clear strategic focus on modernising production systems, strengthening farmer organisations, and adopting advanced technologies to improve efficiency, sustainability, and market integration. Enhancing farmer education, biosecurity, animal welfare standards, and environmental management is essential for aligning with EU requirements. Implementing these measures will not only revitalise the sector and enhance its role in national food security and rural development but also ensure environmental sustainability in line with the EU Green Deal, Farm to Fork Strategy, and CAP Strategic Plans.