Serbia's Unpaved Rural Roads and Weak Irrigation Are Driving Food Costs Higher

Serbia's 32,000 km Municipal Road Network and the 40% Still Unpaved

Serbia's municipal road network is more than twice as long as its state road network, but much of it is not fit for modern agricultural logistics. According to the Fiscal Council's latest analysis, just under 60% of municipal roads have a modern asphalt or concrete surface, while more than 40% are still crushed-stone or dirt roads. The municipal network totals about 32,000 kilometres, compared with roughly 15,000 kilometres of state roads, making local roads a daily link for both the economy and the rural population.

The infrastructure shortfall is not only a quality-of-life issue. The Fiscal Council finds that limited access to local and regional markets, difficult transport of inputs and finished goods, and weak connections to buying centres and processors all raise costs for Serbian farmers. The analysis argues that poor road access directly increases transport costs, harvest losses and logistics expenses, especially for larger farms and intensive production.

Investment has not been absent. Between 2021 and 2025, local governments spent nearly 130 billion dinars, or about 1.1 billion euros, on local road infrastructure. That made roads the largest single item in local capital budgets, around one-third of total local investment. But the Fiscal Council says planning is not based on reliable road records, construction and maintenance are planned separately, and procurement is weak: competition is limited, contract annexes are frequent, and some contract values or work items have been increased several times.

The sharpest gap is in field roads, which directly affect farm costs and efficiency. In 2025, all local governments together spent about 85 million dinars on building and maintaining field roads, while spending on sports fields and stadiums was nearly six times higher, at around 500 million dinars. Irrigation is also underused: despite technical coverage of roughly 140,000 to 150,000 hectares, less than 100,000 hectares are actually irrigated, or about 5% of Serbia's two million hectares of arable land.

Why the Fiscal Council Links Roads, Irrigation and Food Costs

Why the Road Deficit Shows Up in Serbian Food Prices

The Fiscal Council's core argument is that infrastructure gaps act as a structural constraint on agricultural productivity. Subsidies alone have limited reach if farmers cannot move inputs and products efficiently to market. Poor access to parcels increases transport costs, harvest losses and logistics costs, while limited access to mechanisation and buyers reduces the economic viability of production. That mechanism is why a road problem becomes a food-cost problem: higher transaction costs weaken the market position of farmers and work against the effect of budget support.

What the 500 Million Dinar Sports vs 85 Million Dinar Field Roads Comparison Reveals

Field-road investment is described by the Fiscal Council as being at the level of a statistical error. The 2025 comparison underlines the priority gap: municipalities spent almost 500 million dinars on sports facilities and only about 85 million dinars on field roads. Meanwhile, procurement problems such as limited competition, contract annexes and significant deviations in contracted values mean that even the larger municipal road spending does not reliably translate into better infrastructure. The Council points to weak monitoring and a lack of indicators connecting spending to real improvements in road quality.

Irrigation Is the Missing Productivity Multiplier

Only about 5% of Serbia's arable land is actually irrigated, even though installed public and private systems technically cover 140,000 to 150,000 hectares. Some completed assets are not in use, including the Mali Iđoš dam and the Mali Iđoš 2 pumping station. The previous irrigation action plan projected an additional 160,000 hectares for 2021-2023 but delivered only about 30% of that target, and the new 2023-2027 plan is late and largely repeats earlier goals. As climate risks grow, the Fiscal Council sees this underused irrigation capacity as a direct limit on yields, production stability and the shift to higher-value crops.

The Water and Wastewater Constraint Behind Rural Production

Water infrastructure adds another layer of pressure. More than 80% of the population has organised drinking water supply, but water losses and non-revenue water are high, with inadequate quality reported in parts of Vojvodina and the Velika Morava valley. Sewerage coverage is just over 60%, and connection to wastewater treatment plants is only around 13%, meaning much wastewater is discharged untreated. The Fiscal Council notes that industrial pre-treatment is also insufficient, which further burdens existing systems and smaller watercourses.

What Municipalities, Farmers and Processors Should Do With These Findings

• For municipalities: Compare the 2026 draft capital budget for field roads against sports-facility spending. The Fiscal Council found that in 2025 field-road spending was about 85 million dinars nationally, while sports fields and stadiums received roughly 500 million dinars; a partial reallocation would be a measurable step toward improving farm access.
• For local governments: Require a verified road asset register before approving new municipal road projects. The Council found that many local road records are incomplete or do not reflect actual condition, so spending is not reliably linked to better road quality.
• For agricultural cooperatives and input suppliers: Map the unpaved municipal and field-road segments serving your producers. With more than 40% of municipal roads unpaved and field-road investment at statistical-error levels, 2026-2027 logistics assumptions should include higher transport losses and delivery risk in affected rural areas.
• For policy makers and farmers: Track delivery of the 2023-2027 irrigation programme against the previous plan's 30% realisation rate and the unused Mali Iđoš system. Activating completed but non-operational infrastructure is a faster win than building new capacity.
• For food processors and exporters: Factor water and wastewater constraints into sourcing plans. Only about 13% of the population is connected to wastewater treatment and sewerage coverage is just over 60%, with quality problems in Vojvodina and the Velika Morava valley affecting water-intensive processing and supply chains.