02/2017
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17 S e r b i a Agriculture Bulletin 1.4 billion RSD to be invested in registered farms
Changes to IPARD program favor small farmers
Serbian winemakers to join EU markets
Serbia needs greater presence at world fruit fair
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5)
1.4 billion RSD to be invested in registered farms .......................................................................... 2 Invitation to lease state land is open to all ..................................................................................... 2 Subsidies for the purchase of agricultural machinery ..................................................................... 3 Guarantee Fund provides favorable lending conditions ................................................................. 3 Good communication key to growth, says Nedimović .................................................................... 3
Foreign Aid ................................................................................................................. 4 6) 7) 8)
GIZ hosts bioenergy workshop ........................................................................................................ 4 Zrenjanin school receives 200,000 EUR from EU ............................................................................ 4 Changes to IPARD program favor small farmers ............................................................................. 4
Private Sector.............................................................................................................. 5 9) 10) 11) 12) 13) 14) 15)
Diesel prices rise by 17.2% from last year ....................................................................................... 5 Serbian winemakers to join EU markets ......................................................................................... 5 Grain exports brought to a standstill by ice .................................................................................... 5 Dairy subsidies wasted on administration, say farmers .................................................................. 6 Serbia needs greater presence at world fruit fair ........................................................................... 6 Small farmers in Kikinda unhappy with subsidies ........................................................................... 6 Farmers cannot pay off debts, says Ombudsman ........................................................................... 7
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)
1.4 billion RSD to be invested in registered farms
February 21st, 2017, http://www.dnevnik.rs/politika/za-registrovana-poljoprivredna-gazdinstva-14-milijarda-dinara
The Provincial Secretariat for Agriculture, Forestry and Water Management has announced it will be directly investing around 1.4 billion RSD in a variety of non-repayable programs aimed at registered agricultural holdings. The figure is a significant increase on last year, in which approximately 800 million RSD was invested, according to Secretary Vuk Radojević. The beneficiaries of the investment will be decided upon application into various initiatives which will be announced by the end of February, and local farmers are encouraged to keep abreast of new opportunities by monitoring the Secretariat website and obtaining free advice from the Agricultural Extension Service. The investment will include the following proposed initiatives: • 850 million RSD invested in the purchase of irrigation systems, hail defense programs and greenhouse installations • 100 million RSD invested in the purchase of plant machinery • 100 million RSD devoted to start-up programs, allowing young people in rural areas to begin agricultural production and register their farms, with every young farmer receiving an average of 10,000 EUR, 75% of which is non-payable • 50 million invested in the livestock industry, aimed specifically at improving breeding programs and enhancing genetic quality Radojević explained that the amounts earmarked for each facet of the industry are fluid, so if an excessive amount of interest is shown in one area over others, surplus funds can overflow in to meet the demand. He indicated that the incentives will be open to applications until the entire investment fund has been exhausted and said that a significant amount of the budget will be devoted to developing processing capacity in each of the individual sectors.
2)
Invitation to lease state land is open to all
February 14th, 2017, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:649930-Nedimovic-Poziv-za-zakupdrzavnog-zemljista-otvoren-za-sve
Agriculture Minister Branislav Nedimović has confirmed that the lease of state land is open to all applicants, underlining the transparency of the process and insisting that smaller farmers would not be threatened by the arrangement. Nedimović also said that government investment of 500,000 RSD, which is aimed at improving quality across the board and helping both producers and the state, must be applied for and accepted within the next three years, with at least 30% of that figure being implemented in each year. He went on to say that a significant percentage of stakeholders who have submitted letters of intent are those who wish to increase their operations beyond the production of raw materials and onto the next stage, thus building greater value in their business. He said that the largest number of applicants were associated with the processing of fruits and vegetables and that the incentive was open to the whole agricultural community, thus precluding the possibility of smaller farmers being muscled out by larger producers. He also said that abuses of land leasing will no longer be possible under the new legislation.
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BFC Agriculture Bulletin
3)
Subsidies for the purchase of agricultural machinery
February 3rd, 2017, http://www.rtv.rs/sr_ci/vojvodina/sremska-mitrovica/subvencije-za-kupovinupoljomehanizacije_797112.html
As announced by the Ministry of Agriculture earlier this year, farmers who wish to purchase new agricultural machinery are eligible for subsidies. The funds are being allocated primarily to the purchase of tractors for horticulture and viticulture purposes, but are also available for other agricultural machinery as well. At present, there are around 600,000 tractors and 2.4 million pieces of agricultural equipment across Serbia, with as much as 95% of those more than 10 years old. In order for farmers to be able to renew and upgrade their machinery, Agriculture Minister Branislav Nedimović has indicated that subsidies will be available from the second half of February. Those purchasing tractors will benefit from a government grant of up to 50% of the total purchase price, while the percentage contributed towards other machinery will vary depending upon individual circumstances
4)
Guarantee Fund provides favorable lending conditions
February 2nd, 2017, http://www.garfondapv.org.rs/favourable-lending-conditions-for-farmers/
The Guarantee Fund of the Autonomous Province of Vojvodina is ready to fully support farmers and help them to develop production, says Đorđe Raković, Director of the Fund. Throughout 2017, the Guarantee Fund will subsidize interest rates on loans taken out by owners of registered agricultural holdings in Vojvodina, as well as issuing guarantees for those farmers who do not have sufficient credit ratings to apply directly to banks for funding. In particular, this refers to small farms, newly registered farms and young people keen to engage in agricultural production. The Fund has held meetings with representatives of all 45 local authorities across Vojvodina to promote interstate cooperation and raise awareness about funding application procedures. Local governments have agreed to subsidize interest rates in their entirety or up to a maximum of 3% for loans that mature in five to seven years. Among other incentives, there are currently funds available to subsidize the procurement of agricultural machinery and equipment, the purchase of land, the construction of prefabricated silos, the purchase of energy-efficient equipment and equipment intended for utilizing renewable energy sources. New funding lines are also being investigated, especially in relation to the construction of silos, warehouses and cold storage facilities as these particular commodities are currently in high demand.
5)
Good communication key to growth, says Nedimović
February 2nd, 2017, http://www.mpzzs.gov.rs/odlicna-komunikacija-ministarstva-poljoprivrede-i-zastite-zivotne-sredine-idelegacije-eu/
The Minister of Agriculture Branislav Nedimović has met with the head of the EU Delegation Michael Davenport and his associates to discuss current issues in agriculture and environmental protection, with special emphasis being placed on the theme of food safety and all activities carried out in accordance with the Instrument for Pre-Accession Assistance for Rural Development (IPARD II) program. The meeting, which took place in Belgrade on the February 2nd, highlighted the increase in exported agricultural products from Serbia to the EU since the implementation of the Stabilization and Association Agreement (SAA), including a significant rise in exports of pork products during that time. Nedimović expressed his supreme satisfaction at the EU’s understanding and cooperation over the last decade, stressing the importance of good communication in achieving economic growth and increased exports since Serbian accession to the EU.
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BFC Agriculture Bulletin
Foreign Aid 6)
GIZ hosts bioenergy workshop
February 27th, 2017, http://www.agrosmart.net/vesti/saradnjom-giz-a-uprave-agrarna-placanja.html
Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ) organized a two-day workshop on the topic of bioenergy as part of the ‘Development of Sustainable Bioenergy Markets in Serbia’ project. The workshop emphasized the necessity to strengthen capacities and create a favorable environment for the sustainable use of bioenergy in order to both contribute to rural development and reduce greenhouse gas emissions. Participants of the workshop discussed the advantages and disadvantages of using bioenergy, the resources and aspects of the sustainable use of bioenergy, and the basics of solid biomass combustion technologies. Discussions were also held regarding the practical implementation of projects associated with introducing bioenergy measures into Serbia, including financial analyses and business plan recommendations associated with such projects. The workshop was attended by Slobodan Cvetkovic, head of the group for the protection of land and renewable resources at the Ministry of Agriculture, and Dragan Gajic, head of the department for approving projects at the Department of Agricultural Payments.
7)
Zrenjanin school receives 200,000 EUR from EU
February 21st, 2017, http://www.rtv.rs/sr_lat/vojvodina/zrenjanin/poljoprivrednoj-skoli-200-hiljada-evra-iz-eu_801814.html
The Central Agricultural School in Zrenjanin has been provided with 200,000 EUR of funding from an EU project, helping to provide modern machinery and equipment which students will use to improve their practical skills. The Zrenjanin School is one of 10 across Serbia which secured funding from the EU, with a total of 49 centers of learning applying for participation in the project. To date, 50,000 of the 200,000 EUR has been given to the school in the form of new machinery and equipment. The Director of the School, Milica Damjanovic Tomin, has indicated that the funds will be used to purchase a new tractor and a variety of equipment for their veterinary cabinets.
8)
Changes to IPARD program favor small farmers
February 9th, 2017, http://www.agrosmart.net/ipard/ipard-menja-bolje-male-poljoprivrednike.html
The Directorate for Agrarian Payments has announced changes to the Instrument for Pre-Accession Assistance for Rural Development (IPARD) program, first adopted in January 2015 but not yet implemented. The amendments relate primarily to the size of eligible farms and the limits of what a household will be able to apply for, beyond which point the national resource framework will provide support. Additionally, there are changes to the minimum value of eligible investments, though no further details on the specifics of these amendments were given. The Administration were keen to emphasize that all changes are being made in order to clarify the existing legislation, to clean up technical errors which were made in the initial preparation of the program and to eliminate gaps through which smaller farmers could fall. For example, the specific criteria relating to the size of farms in the fields of milk, meat and vegetable production has been amended so that smaller producers are still eligible for both national and EU support schemes. The Directorate indicated that the last impediments to the implementation of the IPARD program were being investigated now, with the first announcements concerning the procurement of physical assets expected to take place in the last quarter of 2017. An exact date cannot yet be determined, since it is dependent on the EU’s own timetable and will vary depending on the outcome of an internal audit. Page 4
BFC Agriculture Bulletin
Private Sector 9)
Diesel prices rise by 17.2% from last year
February 15th, 2017, http://www.rtv.rs/sr_ci/vojvodina/novi-sad/setva-nesto-skuplja-od-lanjske_800391.html
The costs of sowing seeds this spring will be significantly higher than in 2016, according to data compiled by the Department of Agriculture. The hike is largely due to a rise in the price of diesel, which has increased by 17.2% from last year. Other operating costs have not risen and some, including NPK fertilizers, have actually fallen from 2016. However, the skyrocketing costs of diesel (up by approximately 10 RSD per liter) mean that the overall expenditure involved in spring sowing will also increase.
10) Serbian winemakers to join EU markets February 14th, 2017, http://beta.rs/ekonomija/ekonomija-srbija/54293-udruzivanje-vinara-srbije-osnova-za-povecanje-izvoza
Key members of the Serbian wine industry, the government and the EU assembled in Karlowitz for a debate regarding the integration of Serbian winemakers into European markets. The panel was told that in addition to bringing Serbian legislation into line with existing EU guidelines, the creation of a Serbian winemakers’ association which would represent their interests abroad is a basic requirement in increasing exports outside of the national boundaries. The EU Delegation’s Attache Karl-Heinz Vogel stressed the need for Serbian vineyards to adopt European standards of wine production in order to join the EU market, which is currently the biggest producer of wine worldwide. Meanwhile, the Director of Agriculture, Food and Forestry for the Croatian Chamber of Economy Božica Marković highlighted the important role that a Serbian winemakers’ association would play in establishing the nation as a top producer of wines in the global consciousness.
11) Grain exports brought to a standstill by ice February 13th, 2017, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:649775-Led-okovao-izvoz-zitarica
While the colder temperatures that have characterized the beginning of 2017 have not caused significant damage to winter crops or impeded their growth, they have had an effect on agricultural exports via another method. The Danube is the main outlet for many grain and oilseed crops, including soybeans, corn and wheat, and ice on the river has hindered its delivery to other countries over the last month. According to figures compiled by Vukosav Saković from Cereals Serbia, 540,000 hectares of wheat were planted last autumn and the country is expected to enjoy a fourth record year for the grain in 2017. This yield far exceeds the national demand for wheat, and with no viable export route because of the ice on the Danube River, prices have been falling as farmers scramble to stay competitive. Similarly, Saković said there are 2.2 million tons of corn sitting in Serbian silos which are earmarked for exportation. Although 900,000 tons of grain have already been exported, it is imperative that the remaining amount is sold abroad in order to avoid extensive repercussions within the Serbian economy. Corn is currently trading at a price of 17.82 RSD per kilo (plus VAT), while wheat is priced at 20.02 RSD per kilo, representing a decline of 1.62%. Soybeans (of which there is currently a surplus of 60,000 tons) are seen as a more reliable export commodity than other, since their greatest export market is the EU and the upper course of the Danube is free from ice.
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BFC Agriculture Bulletin
12) Dairy subsidies wasted on administration, say farmers February 13th, 2017, http://www.rtv.rs/sr_ci/vojvodina/subotica/mlekari-subvencije-trose-na-administraciju_799877.html
More than half of state dairy subsidies per registered animal go to unnecessary administrative costs, claim Vojvodina farmers. According to Josipa Mačković, a cattle farmer from Ljutova near Subotica, over 50% of the subsidies he receives goes towards validating papers under the guise of regional breeding services. Mačković said that he must pay 300 RSD per cow twice a year in order to obtain verified veterinary analysis in his daily check for mastitis, as well as a 200 RSD tracking fee for every calving. As a result, over half of the subsidies are swallowed up by these administrative costs, thus having a knock-on effect on the competitiveness of the domestic dairy industry.
13) Serbia needs greater presence at world fruit fair February 12th, 2017, http://www.rtv.rs/sr_ci/ekonomija/aktuelno/srbija-na-najvecem-svetskom-sajmu-voca_799665.html
The beginning of February saw the 25th Fruit Logistica Fair take place in Berlin, which is the largest fair in the world dedicated to the production and trade of fresh fruit and vegetables. This year, the fair welcomed over 70,000 attendees from 186 countries around the globe, as well as more than 3,000 companies from 86 different nations – but only two from Serbia. Both of the Serbian businesses in attendance – Pollino and Delta Agrar – were exhibiting for the fifth year running and bemoaned the lack of other compatriot companies to boost Serbia’s global profile in the fruit and vegetable market. Goran Stanarević from Pollino said that preparation and promotion were instrumental in making the fair a success, but stressed that appearing at Logistica for several years continuously is key to feeling its full benefits. Though the country was not well-represented in terms of companies, Serbian businessmen visited the event in droves. Among them was Mile Radisavljević from the Belgrade-based irrigation company ATP Irrigation, who underlined the importance of both quantity and quality when attending the festival. For an outfit to appear as an attractive potential business partner, Radisavljević said they must not only produce at least 1,000 tons of a particular fruit or vegetable per variety, but also comply with globally-recognized production standards. Since its inception in 1993, the fair has grown over 100 times in size and is attended by exhibitors from every corner of the globe, with Spain’s collective effort being the largest in this year’s edition. Attendees are encouraged to plan their visit in advance in order to make the most of their time at the event. Tickets range from 31 to 150 EUR, depending on which lectures, exhibitions and events are included.
14) Small farmers in Kikinda unhappy with subsidies February 8th, 2017, http://www.rtv.rs/sr_ci/vojvodina/kikinda/ki-mali-ratari-nezadovoljni-subvencijama_798429.html
Farmers from the north of Banat have criticized the Decree on Incentives in Agricultural Production, which aims to provide support for those working in agriculture and animal husbandry. At present, the government offers 2,000 RSD per hectare of farm land. However, those who operate smaller farms believe that their livelihoods are being jeopardized, since their reduced size works against them and makes them exempt from certain initiatives. With regards to animal husbandry, the incentive for swineherds has been increased from 7,000 to 10,000 RSD, though low purchase prices and a decrease in household production have endangered the industry. The Decree also provides 7,000 RSD for the production of male goats and sheep, while cattle incentives remain at 25,000 RSD and calves intended for fattening receive 5,000 RSD of subsidies. Elsewhere, beekeepers will receive 720 RSD per hive, though treatment against varroa parasites costs 700 RSD alone, leaving precious few funds for anything else. Page 6
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15) Farmers cannot pay off debts, says Ombudsman February 1st, 2017, http://www.danas.rs/ekonomija.4.html?news_id=337764&title=Za%C5%A1titnik%3a+Poljoprivrednici+ne+mogu+da+otplate+d ug
Ombudsman Sasa Janković has claimed that the debt facing farmers is huge and many are so far in the red that they may never be able to pay it off. With the national debt of rural households already at 90.8 billion RSD, Janković predicted that those already in arrears are likely to be sold debt assets and therefore find themselves in an even worse situation, with a seemingly never-ending obligation to pay. The Tax Administration has already sent warnings that many debtors could lose their fields, and two years ago raised proposals for all landowners (regardless of the size of their estate) to pay a fixed fee of 96,000 RSD per year for pension and health insurance costs. At the time, the ombudsman highlighted the injustice of the ruling and called for changes in the Pension Fund scheme, though no progress has been made to date. Janković has once again called on the authorities to review the status of farmers and reassess their ability to pay depending on the size of their estate, claiming that the issue will not go away unless action is taken. Additionally, he encouraged the authorities to address the growing problem of young people leaving rural villages, thus jeopardizing the future of the agricultural industry.
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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. The articles do not necessarily reflect the opinions of BFC, its staff, its associates or its partners. Copyright of articles is retained by their authors.