#11 Serbia Agriculture Bulletin, BFC

08/2016

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11 S e r b i a Agriculture Bulletin Agricultural Subsidization to be Reviewed

Rural Tourism Incentive Program Launched Consulting Services Recommended for IPARD Applicants Agricultural Output and Exports Expected at USD 5.5 Billion and USD 3.8 Billion, Respectively

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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4)

Agricultural Subsidization to be Reviewed ...................................................................................... 2 Rural Tourism Incentive Program Launched ................................................................................... 2 Lumpy Skin Disease Vaccination Program Fully Implemented........................................................ 2 Vojvodina Farmers Receive RSD 145 Million in Irrigation Subsidies ............................................... 2

Foreign Aid ................................................................................................................. 3 5)

Consulting Services Recommended for IPARD Applicants .............................................................. 3

Private Sector.............................................................................................................. 3 6) 7) 8) 9) 10) 11) 12) 13)

Organic Food Exports Increase Five Fold in Three Years ................................................................. 3 Refineries Seek Ban on Sunflower Exports to BiH ........................................................................... 3 Market Conditions Adversely Affecting Tomato Growers............................................................... 4 Agrovizija: The Meat Industry should be Expanded ........................................................................ 4 Honey Harvest Reaches Record Levels ............................................................................................ 4 Poor Weather to Reduce Fruit Harvest by 40%............................................................................... 5 Agricultural Exports to Russia Total USD 155 Million in First Half of 2016 ..................................... 5 Agricultural Output and Exports Expected at USD 5.5 Billion and USD 3.8 Billion, Respectively ... 5

Note: The Agriculture Bulletin presents a monthly roundup of headlines and news stories related to Serbia’s agricultural sector.

This bulletin is prepared by Business & Finance Consulting—a Swiss-based development finance consulting company.

Currently, BFC is implementing “Development of Financial System in Rural Areas in Serbia” programme for KfW. Read more »

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BFC. Agriculture Bulletin

State Initiatives 1)

Agricultural Subsidization to be Reviewed

August 23rd, 2016, http://agrovizija.rs/index.php?id=4034

Within the next 15 days, the Ministries of Agriculture and Economy will announce the budgets and subsidization policies for the 2016 as well as 2017, according to newly appointed Minister of Agriculture Branislav Nedimovic. Successful programs will continue; however, surplus funds from unsuccessful schemes will be reattributed, he added. The Ministries will push for a higher percentage of the agriculture budget to go towards family farms, young farmers, sectors with insufficient production capacity, and trade deficit reducing measures, said Nedimovic. Preferential credit for small and medium agro-enterprises will be provided with the prospective cooperation of international financial institutions, while the government will negotiate with Serbia’s international partners to reduce export barriers, said Nedimovic. Measures tackling current difficulties exporting vaccinated beef will be announced, with a policy adjusted to European Commission criteria expected in September.

2)

Rural Tourism Incentive Program Launched

August 11th, 2016, http://www.stips.minpolj.gov.rs/sadrzajv/novi-pravilnik-za-podr%C5%A1ku-razvoju-ruralnog-turizma

A new rural tourism subsidy program has been launched. Beneficiaries will receive up to RSD 1.2 million and a minimum 30% of total investment. Funding will be allocated to business plans that improve rural living conditions, including construction, expansion, renovation, maintenance and procurement projects, as well as restaurant and household catering enterprises.

3)

Lumpy Skin Disease Vaccination Program Fully Implemented

August 3rd, 2016, http://agrovizija.rs/index.php?id=3895

Thanks to the rapid intervention of the Nis Veterinary Institute, the Lumpy Skin Disease (LSD) localization and vaccination program has been fully implemented, said Minister of agriculture Snezana Bogosavljevic Boskovic. Together with Institute experts, the Minister discussed LSD control measures as well as capacity rebuilding measures. The disease – which affects only cattle and cannot be transmitted to humans – hit mainly southern and eastern Serbia.

4)

Vojvodina Farmers Receive RSD 145 Million in Irrigation Subsidies

August 2nd, 2016, http://agrovizija.rs/index.php?id=3886

Co-funding and grants worth RSD 145 million for well construction and irrigation equipment procurement have been distributed to 147 farms, announced Vojvodina’s Secretary of Agriculture Vuk Radojevic. Of the total, RSD 55.2 million comes as a non-refundable subsidy from the provincial budget.

The funds will provide irrigation to roughly 935 hectares of farmland. The competition for the remaining RSD 115 million in well and irrigation funding remains open until September 30. About 85% of Vojvodina’s agriculture budget has already been spent. Following discussions with Vojvodina’s President, however, the budget will be rebalanced and additional funding provided, concluded Radojevic.

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BFC. Agriculture Bulletin

Foreign Aid 5)

Consulting Services Recommended for IPARD Applicants

August 1st, 2016, http://www.rts.rs/page/stories/sr/story/125/drustvo/2404355/koji-je-najbolji-put-do-sredstava-iz-iparda.html

Prospective beneficiaries of the European Union’s (EU) Instrument for Pre-accession Assistance in Rural Development (IPARD) fund are encouraged to receive application assistance from a free government service or opt for a professional service. With most farmers having no business planning experience, such services are essential for success. The large number of consultancies offering IPARD assistance has caused concern about quality standards, however. Some have called for a licensing regime –this is very difficult considering the range of business practices consultancies are expected to advise across, according to the Ministry of Agriculture’s Dragan Mirkovic. Experts recommend the EU model, where consultancies receive a fee only if the application is successful. In Slovenia, application assistance was offered mainly by cooperatives. The IPARD program reimburses up to 50% of investment costs for projects totaling between RSD 10,000-5,000,000.

Private Sector 6)

Organic Food Exports Increase Five Fold in Three Years

August 30th, 2016, http://www.stips.minpolj.gov.rs/sadrzajv/izvoz-organske-hrane-pove%C4%87-pet-puta

Organic farming could represent the future of agriculture in Serbia as exports of organic food products from Serbia have increased 500% in three years, with organic producers growing in number from 300 to nearly 2,000. Despite the rise of organic production in Serbia, there are still obstacles to overcome. The quantity of organic products available is rather low as it takes a minimum of two years to become organically certified and many farmers are unable or unwilling to wait that time when they still have outlets for traditional, non-organic products at home and in other, international markets. The other main issue comes with organic meat. Because livestock must eat organic feed themselves in order to be considered as producing an organic meat product, only grains certified registered with specific entities can be used, complicating the process.

If Serbia, however, is willing to put forth the effort to increase organic production, they will find an eager European market waiting for their products and willing to reward them for the efforts.

7)

Refineries Seek Ban on Sunflower Exports to BiH

August 23rd, 2016, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:621619-Srpska-industrija-ulja-trazizabranu-izvoza-suncokreta-u-BiH

Sunflower oil refineries will meet with the Ministries of Agriculture and Trade to request a ban on the export of sunflower seeds to Bosnia and Herzegovina (BiH), according to Agrosmart, an online news portal. Due to BiH’s free trade agreement with Turkey, domestic refineries can offer better prices to Serbian sunflower farmers, as they do not have to pay export duties on their oil. Serbian sunflower producers, however, do not receive a satisfactory offer from local oil refineries, argues Agrosmart. It is yet unclear how much refineries will offer for this year’s harvest. The Bimaland Sunce processing facilities – in Brcko and Sombor, respectively – have agreed to process between 50,000-100,000 tons of sunflower. This year, 202,408 hectares of sunflower have been cultivated with higher than average yields expected.

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BFC. Agriculture Bulletin

8)

Market Conditions Adversely Affecting Tomato Growers

August 18th, 2016, http://agrovizija.rs/index.php?id=4010

Despite a good tomato harvest expected this year and prices – at RSD 20 per kilogram – being favorable, many industrial tomato farmers will be reducing cultivation in 2017. Instead of prices or crop yields, poor market conditions are being blamed. There are seemingly few collection points and the fruit market is otherwise uncertain. Agrovizija visited Lezimir, a tomato growing village on the slopes of Fruska Gora, where these views were corroborated by local farmers. Jovica Vozarevic, who grows tomatoes over 4 hectares said that, while prices are currently acceptable, there are simply too few points of sale. The price will eventually fluctuate, wiping out revenues, said Vozarevic, adding he will diversify crops next year.

9)

Agrovizija: The Meat Industry should be Expanded

August 11th, 2016, http://agrovizija.rs/index.php?id=3958

The agricultural sector should be developed by expanding the meat industry, according to Agrovizija, an agriculture journal. The European Union (EU) needs an additional 700,000 tons of beef per year and expressed interested in importing 50,000 tons per year from Serbia – the country exported only 315 tons in 2015. Dedicating 1.4 million hectares of Serbia’s pastureland to cattle rearing would increase numbers from the current 15,000-20,000 to 200,000, according to the journal. Poultry capacity should be increased to 200,000 tons annually. Pork production is currently at 3.2 million heads, with domestic demand reaching 5 million heads. German company “Toennies” plans to rear an additional 4 million pigs in Serbia. Pork exports to the EU, however, are banned due to the recent outbreak of swine fever. With the recommended beef and poultry capacity increases, meat production could reach 650,000 tons worth EUR 5.5 billion annually – totaling 60% of agricultural output compared to the current 30%, according to Agrovizija. Investment partnerships should be sought from China, Russia, the EU, and nonaligned countries, with annual foreign direct investment standing at merely 0.6%-1.7%, added the journal.

Serbia has 5.2 million hectares of arable land, of which 4.2 million is cultivated, according to Agrovizija.

Agricultural output grew 0.6% in the last decade and totaled USD 4.75 billion in 2015. Food exports totaled USD 2.8 billion, with a surplus of USD 1.3 billion. The Netherlands – as large as Vojvodina – exports food worth USD 70 billion per year.

10) Honey Harvest Reaches Record Levels August 5th, 2016, http://www.stips.minpolj.gov.rs/sadrzajv/izvezeno-943-tone-meda

Due to favorable weather conditions, a record 12,263 tons of honey were produced in 2015, according to the Chamber of Commerce’s Beekeeping and Honey Representative Mirjana Miscevic. The figure is 179% higher than in 2014 and 67% higher than in 2009. Another record harvest is expected in 2016, said Miscevic. In the first six months of this year, 943 tons of honey worth USD 4.3 million were exported, while honey exports in 2015 totaled 2,045 tons worth USD 9.6 million, an 11% increase compared to 2015, said Miscevic.

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BFC. Agriculture Bulletin

11) Poor Weather to Reduce Fruit Harvest by 40% August 4th, 2016, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:618425-Nepogode-podigle-cene-vocu

Poor weather will result in an estimated 40% drop in this year’s fruit harvest, according to the Serbian Chamber of Commerce (PKS). Quality will also be adversely affected. Strawberry and cherry volumes are expected to fall by 30% year-on-year, and raspberries by 40%. The weather will not impact the apple, plum and watermelon crops, however, reported the PKS. The blackberry harvest will be satisfactory but prices will remain low, it added. The humidity catalyzes the spread of disease, with additional preventative measures increasing prices further. In May and June, fruit prices were 50% higher year-onyear, according to the PKS. Fruit crops have covered an average 200,000 hectares over recent years. In 2015, fruit production totaled 1.32 million tons worth USD 583 million.

12) Agricultural Exports to Russia Total USD 155 Million in First Half of 2016 August 3rd, 2016, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.

Serbia exported agricultural goods worth USD 155 million to Russia in the first half of 2016 – increasing almost 25% year-on-year, according to the Serbian Chamber of Commerce (PKS). This represents 40% of total exports (USD 378.9 million) to the country. Russia received apples worth USD 65 million, a 69% increase year-on-year; strawberries worth USD 16.3 million, a 94% increase; cherries and sour cherries worth USD 8.2 million; and peaches and nectarines worth USD 8 million, a 300% increase. During the same period, total exports to the country increased 17.9% to USD 379.8 million.

13) Agricultural Output and Exports Expected at USD 5.5 Billion and USD 3.8 Billion, Respectively August 3rd, 2016, http://www.agrosmart.net/vesti/poljoprivreda-2016-izuzetna-proizvodnja.html

In 2016, agricultural output and exports are expected at a record USD 5.5 billion and USD 3.8 billion, respectively, according to the Serbian Statistical Office. From January-June 2016, agricultural exports totaled USD 1.51 billion – a 7.7% increase year-on-year – representing 20.6% of all exports, according to Agrosmart’s Vojislav Stankovic. During the same period, imports totaled USD 682.3 million – a 10.9% decrease year-on-year – representing 7.2% of total imports. The agricultural trade surplus totaled USD 829.3 million – a 30% increase year-on-year – representing 221.5% of agricultural imports. The strong results were due to a relatively stable goods offer and a partial recovery of global prices, according to Stankovic.

The most prominent exports were: corn worth USD 185 million; tobacco products worth USD 147 million; frozen raspberries worth USD 133 million; apples worth USD 67 million; wheat worth USD 53 million; sugar worth USD 48 million; non-alcoholic beverages worth USD 33 million; animal feed products worth USD 29 million; biscuits and wafers worth USD 29 million; sunflower oil worth USD 27 million; and soybean oil worth USD 26 million. Fruit and vegetable exports totaled USD 396.5 million – or 5.4% of agricultural exports– while cereal product exports totaled USD 347.9 million – or 4.7% of total agricultural exports.

Imports were dominated by non-competitive products, including green coffee worth USD 29 million, bananas worth USD 25 million, and oranges worthUSD 14 million, according to Stankovic. Prominent competitive imports include: cigarettes worth USD 36 million; apples worth USD 19 million; other tobacco products worth USD 16 million; and fresh tomatoes worth USD 14 million. Fruit and vegetable imports totaled USD 167.4 million – 1.8% of total agricultural imports – while coffee, tea, cocoa and spice imports totaled USD 86.5 million – or 0.9% of total agricultural imports.

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Prepared by Business & Finance Consulting (BFC) www.bfconsulting.com In this bulletin, BFC provides extracts from articles that have been published by others and as a result cannot be held responsible for such content.

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