To IPARD support in 10 steps

Through financial instruments, the European Union (EU) provides assistance to countries that are in the process of joining the EU, in order to successfully implement reforms and meet the accession criteria. One such instrument is the Instrument for Pre-Accession Assistance – IPA, which is available to the Republic of Serbia. A part of these funds is intended for the support within the area of rural development. Therefore, the Ministry of Agriculture, Forestry and Water Management (MAFWM), in cooperation with the European Commission (EC), prepared the IPARD III Programme, from which EUR 377 m (EUR 288 m EU contribution) will be spent for these purposes. Although the IPARD III Programme covers the period from 2021 to 2027, payments to end recipients must be made by the end of 2030. The EC approved the IPARD III Programme in March 2022, and it was adopted by the conclusion of the Government of the Republic of Serbia in December 2023.

Three accredited measures are currently available to the potential recipients of IPARD support within the IPARD III Programme: 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.

Support through Measure 1 – Investments in physical assets of agricultural holdings is intended for primary agricultural producers with the aim of increasing the efficiency, competitiveness and more sustainable production in agri-food sector. Investments in physical assets of agricultural holdings include investments in the construction and equipping of facilities, the raising of perennial production and mother plantations, the purchase of equipment, machinery and mechanisation, computer hardware and software, drones, tractors and specialized vehicles.

Support through Measure 3 – Investments in physical assets concerning processing and marketing of agricultural products and fishery products is intended to support the processing and marketing of agricultural products with the aim of increasing the competitiveness of the agri-food sector and improving the efficiency and sustainability of the food industry. Investments in physical assets related to the processing and marketing of agricultural and fishery products include investments in construction and equipping of facilities, purchasing equipment, machinery and mechanisation, computer hardware and software, and specialized vehicles.

Support through Measure 7 – Farm diversification and business development is aimed at creating new opportunities for employment in rural areas, increasing the level and scope of service availability, and improving the quality of life in rural areas. This measure supports the development of three sectors, namely: rural tourism, direct marketing and small-scale services. Support to this extent refers to the construction/reconstruction and equipping of facilities (including procurement and/or equipping of vehicles) for providing non-agricultural activities.

The persons meeting the eligibility criteria for IPARD support, criteria for project approval and for final payment of IPARD support, the procedure for meeting the eligibility criteria for IPARD support, as well as the list of eligible investments and expenditures are prescribed by special regulations for the implementation of each of the above measures. In order to meet the criteria for project approval, as well as for final payment of the IPARD support, the potential recipient should meet all the conditions prescribed by the rulebook and the public call. The procedure from the idea to the realisation of the investment includes

the following steps:

 

First step: Eligibility for IPARD support

During the first step, you need to check whether you are eligible for IPARD support, bearing in mind that the IPARD Programme supports certain sectors and clearly defined goals for support within those sectors. Through Measure 1, the following sectors are supported: milk, meat, fruit, vegetables, cereals and industrial crops, eggs, viticulture and fishery sector. Within Measure 3, the following sectors are supported: milk, meat, fruit, vegetables, cereals and industrial crops, eggs, viticulture and fishery sector. When it comes to Measure 7, support is provided in the sectors of rural tourism, direct marketing and small-scale services.

In order to be eligible for support, it is necessary to be registered as an agricultural holding, and in an active status, as well as to renew the registration for the current year. Additionally, you need to check the area/location eligibility criteria of the planned investment. Within Measure 1, Measure 3 and Measure 7, the eligible areas for investment are the Region of Vojvodina, the Belgrade Region, the Region of Šumadija and Western Serbia, and the Region of Southern and Eastern Serbia. Depending on the type of measure, as well as the sector, you need to check whether you meet the common and specific criteria regarding the eligibility status for a recipient of IPARD support. Potential IPARD recipients can be natural persons – family farm holders, entrepreneurs, business companies and agricultural cooperatives. IPARD funds are intended for micro, small and medium-sized legal entities.

The allocation of funds is not possible if your obligations towards the state in terms of taxes and contributions are not fulfilled, therefore you are obliged to pay taxes and contributions on the day of the submission of application for project approval, i.e. on the day of submission of the request for the final payment of IPARD support. In case some of these criteria are not met, you lack have the basic prerequisites for applying for support funds and you need to settle your obligations or wait for another call for allocation of funds. On the websites of the Directorate for Agrarian Payments and the Ministry of Agriculture, Forestry and Water Management you can find the Indicative plan of public calls for each calendar year for which the IPARD III Programme is implemented.

Step Two: Establishing a Timeframe

Before applying for IPARD support, serious preparations are necessary. When you have determined that you meet the criteria for IPARD support, you should consider the timeframe that is necessary for the realisation of your investment, as well as how it fits into the deadlines established by the legal framework for the implementation of the IPARD Programme in the Republic of Serbia.

It is important to keep in mind that you must not start with the realisation of the investment before the issuance of the decision of project approval. Starting from the fact that the investment cycle in agriculture is closely related to a certain season and that certain construction works (if they are the subject of the investment) must be carried out within a precisely defined period, the time limit is a key element in making the decision whether and when you will enter the process of realising the right to IPARD support. Realisation of investment in the purchase of equipment, machinery and mechanisation usually does not require a long period of time, unlike the realisation of investments in construction, reconstruction, rehabilitation or adaptation, where, among other things, it is necessary to obtain all the necessary construction permits. Regarding the investments in construction, the time needed to obtain appropriate permits in accordance with the Law on Planning and Construction must also be taken into account. The aforementioned permits must be obtained before the submission of application for project approval and the request for final payment of IPARD support, i.e. depending on the stage of the procedure for realising the eligibility for support funds (e.g. construction or use permit). After the realisation of the investment and the submission of the request for the final payment, the deadline for the decision of the final payment approval of IPARD support is six months. All of the above indicates that serious preparations must be made before submitting an application for IPARD support, as well as that the submission of application for project approval is one of the key dates, i.e. a landmark for setting a deadline.

Third step: Collecting offers and preparing a business plan

In order to be eligible for IPARD support, you must collect offers for your investment, one or three offers, depending on the value of the investment. If the value is less than EUR 10,000, one offer is submitted, that is, three offers are attached if the value of the investment exceeds this specified amount (the same rule applies to Measure 1, Measure 3 and Measure 7). It is preferable, if possible, to collect offers even before the publication of the public call, because you will require the data from the offer when creating a business plan (more on the business plan below). The data from the collected offers must correspond to the data you entered in the business plan (for example, the value of the equipment you are procuring).

If you are required to submit three offers, you must mark the one you have chosen in submission of application for project approval. The basis for the calculation of IPARD support will be determined based on the value of the lowest offer if that amount is not higher than the amount listed as the reference price, which was determined by the Directorate for Agrarian Payments for the given goods, services or works in accordance with the prescribed methodology. The collected offers must be comparable in terms of specification, which means that they must be comparable in terms of technical and technological characteristics, as well as that the same equipment must be included in all offers. Offers must be submitted by different suppliers, who are not affiliated to each other or to You. Also, special attention must be paid to general costs. The acceptable amount for general costs must not exceed the limit of 10% of the value of the eligible expenditures of the investment. Included in this value are the business plan preparation costs, the limit of which is determined depending on the value of the eligible expenditure of the investment in question in a percentage amount, namely: 3% – if the eligible expenditures are more than three million euros, 4% – if the eligible expenditures are more than one million and less than three million euros and 5% – if the acceptable expenditures are up to one million euros.

The business plan is a mandatory part of the documentation for all applicants for project approval. A business plan is a written document in that shows the basic economic elements of your investment, and on which basis of which the justification of investing in Your business idea is assessed. Within the business plan, You must show your production in detail and all the costs of Your investment, including material costs and labour costs. Additionally, all sources of funding for Your business idea (own funds, loans and IPARD funds) must be shown. Also within the business plan, it is necessary to show the plan of sales and income related to Your idea, based on which the data used for the business plan evaluation will be calculated. Different indicators are used to evaluate the business plan, depending on the type of business plan (simple or complex) that you are filling out. If you submit a request within the Measure 1 and Measure 3 for investments with a value of up to EUR 100,000 euros, you fill in and attach a simple business plan, and in case the investment is worth more than EUR 100,000, you fill in and attach a complex business plan. If you submit a request within Measure 7, for investments worth up to EUR 50,000, you fill in and attach a simple business plan, while for investments worth more than EUR 50,000, you fill in and attach a complex business plan. The business plan has a prescribed form, that is, you need to fill in the business plan on the appropriate form that is an integral part of the public call. The business plan is submitted in one printed copy within the submission of application for project approval, but also in electronic form. In order to find out more details about the business plan, as well as about the elements used for the evaluation of the business plan, check the rulebooks for measures implementation. Forms with instructions for preparing a business plan can be found on the website of the Administration for Agrarian Payments, i.e. in the annexes for each rulebook.

What is important to know is that the applicant can prepare the business plan independently or the drafting service can be entrusted to a consultant, who must issue you an invoice for the services performed, on the basis of which you will request an incentive, bearing in mind that the business plan drafting service is an eligible general cost. In case you prepare a business plan yourself, it will not be a general cost for which you can claim an IPARD incentive. Also, it is important to know that the general cost includes the costs of consulting and other professional services for the preparation, procurement, or drafting the documentation for project approval (such as fees for architects, engineers, and designers), as well as preparation of documentation for payment approval of IPARD support .

Fourth step: Securing financial resources for the project

The entire process of realising the right for IPARD support is based on the fact that you independently provide funds to finance the investment, which will be refunded, up to a certain percentage, after the realisation of the project and the decision of the final payment approval for IPARD support. Namely, for example, when, after receiving a decision on the project approval and you buy equipment, build an agricultural holding, a processing plant or a facility for the provision of catering services, you can count on a certain percentage of the invested money being refunded to you.

Before submitting an application for project approval, it would be a good idea to familiarise yourself with the possible amount of IPARD support and the percentage of IPARD support for the selected measure and sector, as well as for the type of investment. The amount of support you can obtain is a minimum of EUR 20,000 and a maximum of EUR 1,000,000 for Measure 1, i.e. a maximum of EUR 1,300,000 for Measure 3 within one public call. When it comes to Measure 7, the minimum and maximum values ​​of IPARD support differ depending on the investment sector, i.e. a minimum of EUR 5,000 to a maximum of EUR 300,000 for the direct marketing sector, from EUR 20,000 to a maximum of EUR 300,000 for rural tourism sector and from EUR 5,000 to EUR 300,000 for the small-scale service sector.

Intensity of support in Measure 1 is up to 60% of the total eligible cost of the investment, and in case the investment is realised in a mountain areas, the intensity of support is up to 65%. Young farmers and certified organic farmers in primary agricultural production can realise the intensity of up to 70% of the total eligible costs. An additional 10% of support is provided for investments related to effluent and waste management and renewable energy. The total percentage amount of support cannot exceed 75% of eligible costs. The intensity of support in Measure 3 is up to 50% of the total eligible costs, while for investments related to effluent and waste management, circular economy and renewable energy the support is increased by 10%. The intensity of support in Measure 7 is up to 60% of the total eligible costs and can be additionally increased by 10% for investments by young farmers certified organic farmers, and additionally increased by 10% for investments related to effluent and waste management, renewable energy or investments in the circular economy. The maximum support intensity in Measure 7 cannot exceed 75%.

What is important to know is that you may be eligible for an advance payment of IPARD support (more on advance payment in step seven). If you do not have your own funds to finance the investment, you can secure them through loans from commercial banks. When talking with your business bank, it is important to coordinate the loan repayment period with the period from the business plan, that is, the business plan must include the entire loan repayment period. It is important to note that you can use IPARD support funds to reduce the remaining credit debt, but not for the bank, guarantee and similar costs. Those who invest wisely can count on the return of funds.

The project must be economically viable, and in order to prepare a sustainable project, the services of local agricultural advisory and expert service of the Republic of Serbia and AP Vojvodina or consultants are at your disposal.

IPARD funds can be used to finance only eligible expenditures and investments that are contained in the lists of eligible expenditures and investments (appendices to the regulations), that is, expenses incurred for the purpose of procuring goods, works or services and which you paid from your business account. You prove all of this with invoices or accounting documents of equal probative value, in accordance with the regulations for the implementation of measures and the applicable national legislation. The eligible expenditure is obtained when we deduct non-eligible expenditures, which include value added tax, from the total value of the investment. You should also pay special attention to non-eligible expenditures, such as taxes, bank charges, used equipment and the like. All non-eligible expenditures are defined by regulations for the implementation of measures.

Fifth step: Submitting an application for project approval

A submission of an application for project approval is done in accordance with the criteria established by the public call. The public call for submission of applications for project approval is published on the official website of the MAFWM, i.e. on the official website of the Directorate for Agrarian Payments. Each public call contains information about the investments for which the call is issued, the deadline for submitting an application for project approval, the amount of funds available within the call, request forms for project approval and the final payment for IPARD incentives, documentation attached to the request forms, as well as other data related to the specific call. The Directorate for Agrarian Payments can announce one or more Public Calls during the calendar year for different measures, i.e. for one or more sectors, i.e. investments. The application forms for the project approval, published within the public call, also available on the websites of the MAFWM and the Directorate for Agrarian Payments, should be filled out legibly in the Serbian language. If you are missing some of the documentation, the Directorate for Agrarian Payments will contact you with a request to supplement the documentation, but you are obliged to submit the documentation that is stated as mandatory in the measure implementation rulebooks when submitting an application for project approval.

The procedure for project approval is initiated with the status data of the applicant in the Register of Agricultural Holdings on the day of the submission of application for project approval. An applicant can exercise the right for project approval for only one submitted application under the same Public Call. Keep in mind that the time of the application submission (day, hour and minute) and proper documentation are of crucial importance in the case of the scoring and ranking selection criteria (see the scoring and ranking procedure in the next step).

Sixth step: Project approval

You must not take any action related to the realisation of the investment before receiving the decision the project approval, except those that fall under general costs. Projects are approved through public calls, based on the submitted applications for project approval. You need to submit a completed application for project approval and prescribed documentation, which the Directorate for Agrarian Payments will check within the administrative control, as well as on-the-spot check when necessary. Unlike the previous Programme period, in which on-the-spot check was carried out by physically visiting all applicants for project approval before issuing a decision on project approval, control will be carried out on the basis of submitted photographs of the place of inspection of the investment object by the applicant. Photographs must not be older than 15 days from the date of submission of the application for project approval and must include the place, latitude and longitude, as well as the date and time of the photograph. If the project approval applicant does not submit a photograph of the place of control of the object of investment, the on-the-spot check will be carried out by a physical visit. Also, the on-the-spot check will be carried out by a physical visit to the place of control of the object of the investment, if for that type of investment the rulebook prescribes that control should be carried out.

The amount of available funds is included in the public call. If the amount of funds available according to the public call is not sufficient for all submitted applications for project approval, the Directorate for Agrarian Payments will implement the scoring and ranking procedure. After the scoring and ranking procedure, the Directorate for Agrarian Payments publishes the score list of applications for project approval on its official website. Applicants for project approval can submit an objection to the score list within 15 days from the day of its publication. The Directorate for Agrarian Payments publishes the final ranking list on its official website, which contains the ranking list of requests for which there are available funds for project approval and the ranking list of requests for which there were no funds available within the public call. Applications for which there are no available funds are suspended by the decision. In this way, itis possible for all applicants for project approval, for which there were no available funds, to prepare in time for the next public call.

In the case when there are several projects with the same number of points according to the scoring and ranking criteria, priority is given to the project with the earlier submission time of the request for project approval (day, hour, minute). Ranking and scoring criteria are defined within the rulebook for the measure for which you are submitting an application for project approval. For a complete list of required documentation, see the rulebooks for the implementation of measures, as well as the guidebooks for IPARD recipients on the websites of the MAFWM and the Directorate for Agrarian Payments. Also, we advise you to independently calculate how many points you can earn before submitting an application for the public call.

After the administrative control and on-the spot check, i.e. if you met the general and special conditions for being eligible for project approval, the Directorate for Agrarian Payments will pass a decision on project approval, after which you can start the investment. The decision contains all the data about the project with eligible investments and costs, the total approved amount of IPARD support, as well as the deadline for the realisation of the investment and the deadline for submitting the final payment request for IPARD incentives. The deadline will be different for different types of investments, that is, it will depend on the complexity of the investment. The planned period will be longer for the construction and equipping of the facility compared to the period planned for the procurement of equipment, machinery and mechanisation. Keep in mind that IPARD support recipients are entitled to only one modification of the approved project. The request to change the approved project is submitted no later than 30 days before the deadline for the implementation of the approved project, that is, the deadline for the submission of the request for the final payment of IPARD support.

Seventh step: Approval of the advance payment of IPARD support

It is important to know that the recipient of IPARD support can is eligible for an advance payment of IPARD support in the amount of up to 50% of the value determined by the decision of project approval. The request for the advance payment of IPARD support is submitted within 60 days from the receipt of the decision of project approval, accompanied by a written bank guarantee corresponding to the amount of 110% of the required amount of advance payment. By using advance payment funds, you can more easily realise the investment that has been approved for you.

All eligibility conditions for advance payment of IPARD support are prescribed by the measure implementation rulebooks. Unlike the IPARD II Programme, the recipient of IPARD III support can request the return of the bank guarantee before the bank guarantee expires.

Eighth step: Realisation of investment and compliance with standards

The main purpose of the IPARD III Programme is achieving the EU standards, as well as to improve the competitiveness of potential IPARD recipients and income diversification in rural areas. In order for the goal to be achieved, each investment, i.e. a registered agricultural holding, whether it is a natural or legal entity, will have to meet all national standards, which are harmonised with the EU standards, on the entire agricultural holding. Also, the investment in question should meet the aforementioned standards. Evidence of compliance with the standards is issued by the competent state authorities, i.e. IPARD technical bodies. Obtaining these documents will be done on the basis of a request, which the Directorate for Agrarian Payments will ex officio send to the competent state bodies for the purpose of inspection, with the aim of determining the adherence to standards.

Measure implementation rulebooks of prescribe the standards that, upon the completion of the investment, should be met by the agricultural holding and the investment. If you want to be a potential recipient of IPARD support, this is a step that you should pay particular attention to. You need to review the compliance of Your farm with the relevant national standards. In case there are deviations, you must take into account potential additional costs that cannot be financed from IPARD funds.

The ninth step: Final payment approval of the IPARD support

It is important to keep in mind that you can expect the payment of funds only after you have completed the entire investment. In order to receive funds, among other things, it is necessary that the investment be realised in accordance with the decision of project approval, as well as that you have settled your obligations to the state in terms of taxes and contributions. Before you submit a request for the final payment to the Agricultural Payments Authority, the relevant government authorities must check whether you have met all national and EU standards, as discussed in the previous step.

The procedure for final payment approval is initiated by submitting a request for the final payment, which you submit to the Directorate for Agrarian Payments. You submit the request after the realisation of the approved investment (project), within the deadline specified in the decision on project approval. Along with the request for final payment of IPARD support, you submit the documentation prescribed by the relevant rulebook (depending on the measure for which the project was approved), that is, by public call. After the administrative verification of the request, the Directorate for Agrarian Payments performs the on-the-spot check and verifies the fulfilment of the prescribed conditions, that is, verifies whether the recipient has implemented the investment in accordance with the decision on project approval. When calculating the final amount of IPARD support, the Directorate for Agrarian Payments checks whether there has been a general increase in the prices of construction materials, machinery and equipment on the market for approved investments in the period from the end of the public call to the adoption of the decision on project approval. Bearing in mind the above, the final amount of IPARD support will be determined by price indexation from the list of eligible investments and expenditures.

When it is determined that all prescribed conditions have been met, the Director of the Directorate for Agrarian Payments makes a decision on the final payment of IPARD support, which contains information on the determined total amount of IPARD support and orders the payment to the recipients designated account.

Tenth step: Control after the final payment of IPARD support

It is important to keep in mind that by realising the right to IPARD support, you also assume certain obligations for a period of five years after the final payment. During this period, you must use the investment for its stated purpose. Also, you may not appropriate the investment, nor allow someone else to use it. You must keep all documentation related to the IPARD project. The subject of the investment must be marked in order to inform the public about the EU role in the implementation of IPARD Programme. It is essential that you provide access and on-the-spot check to all authorised persons, such as representatives of the Directorate for Agrarian Payments, audit authorities, EC, etc. On-the-spot check will be performed on all recipients of IPARD support, at least once, within the 5 years from the date of the final payment of IPARD support.