06/2017
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21 S e r b i a Agriculture Bulletin Subsidized agricultural loans at Credit Agricole Serbia Nedimović announces changes to agrarian budget Construction begins on Sjenica indoor city market Arab company invests 23 million EUR in irrigation
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6) 7) 8) 9) 10)
Subsidized agricultural loans at Credit Agricole Serbia ................................................................... 2 Novi Sad allocates subsidies for agricultural products .................................................................... 2 Nedimović says state will help fight wheat price hikes ................................................................... 2 Serbia must gradually adopt EU agricultural legislation ................................................................. 2 State to intervene in raspberry market ........................................................................................... 3 Nedimović announces changes to agrarian budget ........................................................................ 3 Beef to be freely exported again from June 24th ........................................................................... 4 Serbia and Croatia launch organic production project.................................................................... 4 Irrigation costs subsidized by provincial aid .................................................................................... 4 Nedimović: All farmers cannot have the same pension .................................................................. 4
Foreign Aid ................................................................................................................. 5 11) Construction begins on Sjenica indoor city market ......................................................................... 5
Private Sector.............................................................................................................. 5 12) 13) 14) 15) 16)
Arab company invests 23 million EUR in irrigation ......................................................................... 5 Wheat yields down 25% from last year ........................................................................................... 6 Banks begin to turn to agriculture ................................................................................................... 6 Serbia spends nine million USD on imported hazelnuts ................................................................. 6 High yield needed to keep sugar beet competitive......................................................................... 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)
Subsidized agricultural loans at Credit Agricole Serbia
June 27th, 2017, http://subvencije.rs/vesti/subvencionisani-krediti-za-poljoprivredu/
Credit Agricole Serbia is working with the Ministry of Agriculture as part of the Ministry’s agricultural loan subsidy program. The program provides farmers with low interest RSD loans for the procurement of raw materials and other relevant assets needed for plant or animal production. The loans are fixed at 3% per annum, or 1% per annum for farmers under 40 or farmers who work on land which is registered as difficult to work. The maturity of the loans varies from 1 to 5 years and offers repayments in monthly, quarterly, semi-annual or annual installments, depending on the purpose of the loan. The maximum loan amount is RSD 6 million for agricultural holdings and entrepreneurs and RSD 18 million for legal entities.
2)
Novi Sad allocates subsidies for agricultural products
June 23rd, 2017, http://www.agronews.rs/17118-2/
The city of Novi Sad has announced the allocation of subsidies for agricultural products bearing a geographical indication (GI). A total of two million RSD has been set aside for the project, with the money intended to pay for part of the product certification cost for use inside the city territory in 2017. Applicants are requested to submit their claims by no later than July 15th and application forms can be obtained during business hours (07.30 to 15.30) at the registry office of the City Administration for General Affairs in the Novi Sad Town Hall.
3)
Nedimović says state will help fight wheat price hikes
June 23rd, 2017, http://www.rtv.rs/sr_ci/vojvodina/novi-sad/nedimovic-trziste-formira-cenu-psenice-drzava-cepomoci_834973.html
The price of wheat may ultimately be dictated by the marketplace, but the state intends to help the Ministry of Agriculture prevent serious price hikes by providing reserves of the commodity, according to Minister Branislav Nedimović. Nedimović said he hoped that the purchase of reserve wheat would be finalized in June in order to regulate the market and avoid an eventual monopoly by one company or other undesirable outcome. He went on to explain that the Ministry will be working closely with the Commission for the Protection of Competition Law to detect such unwanted elements and that even though less wheat was sown this year, there will still be around a million tons available for export.
4)
Serbia must gradually adopt EU agricultural legislation
June 22nd, 2017, http://www.euractiv.rs/pregovori-sa-eu/11472-srbija-treba-postupno-da-usvoji-pravne-tekovine-iz-poglavlja11.html
As talks continue to progress with regards to Serbia’s accession to the EU, experts have suggested that gradual adoption of the European legislation and the building of administrative capacities must begin now, so that the country is well-equipped to compete once full accession has been achieved. Miroslav Božić, who serves as the Legal Support to Negotiations (PLAC II) expert for Serbia, has said that Chapter 11, which deals with agriculture and rural development, is the most important part of the EU acquis communautaire, incorporating as it does over 100,000 individual rules. As a result, Božić has stressed the importance of implementing these rules gradually and drew attention to the 408 billion EUR set Page 2
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aside by the EU in its 2014-2020 budget. 77% of that sum is designated for direct payments and market incentives, while the remainder is intended for rural development. Meanwhile, advisor to the Ministry of European Integration Danilo Golubović said that although Serbian farmers should prepare to spend far greater sums of money and face stiffer competition upon accession to the EU, they could also expect a variety of benefits. These include access to the single market, a stable price, a greater number of consumers, support for farmers and regulation in the field of competition. Golubović also said that the government was working hard to eliminate its shortcomings with regards to the Administration for Agrarian Payments (AAP), as noted by the European Commission (EC) audit. Compliance with the EC is mandatory in order to receive IPARD funds from the EU, which are intended to help rural development in acceding members between 2014-2020 and total almost 230 million EUR. Golubović is hopeful that the AAP will be fully compliant by the end of August, at which point the EC will return to conduct another audit.
5)
State to intervene in raspberry market
June 13th, 2017, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:670234-Rat-proizvodjaca-i-otkupljivacamaline
The Serbian government will do everything in its power to stamp out monopolistic behavior in the raspberry market, according to the chief advisor to the Ministry of Agriculture Predrag Lučić. In particular, the state plans to fight cold storage cartels, which have the power to influence the purchase price of raspberries throughout Serbia. Lučić said the Ministries of Agriculture, Finance and Trade will work together with industry inspectorates to regulate the market as the economic conditions require. There is disagreement as to what is the biggest obstacle to market stability. President of the cooperative farm ‘Agro-Eco Fruits’ Bozo Joković argues that the falling price of raspberries in certain regions (where they can be obtained for as little as 100 or 120 RSD per kilogram) does not cover the basic costs of production. Meanwhile, cold storage companies say that surplus stock from 2015 and 2016 is the chief problem, since falling world prices have made buyers wary of purchasing more produce.
6)
Nedimović announces changes to agrarian budget
June 6th, 2017, http://agrovizija.rs/Index.php?id=2951
The Ministry of Agriculture has announced changes to its agrarian budget, with more money being allocated to the purchase of tractors. The new total will be in excess of 1.1 billion RSD, an increase of 900 million RSD on the previous plan. Money has been taken from the incentives for mineral fertilizer (which were not exhausted last year and which have now fallen to just under three billion RSD) to supplement the tractor fund. The coffers for tractor purchases could yet be swelled further, if plans to redirect funds earmarked for insurance compensation go ahead. With companies reluctant to sign up to insurance plans due to a lack of confidence in the industry, an additional 450 million RSD could be added to the tractor pot, resulting in more than 1.5 billion RSD in total. That would allow 820 farms a grant of 15,000 EUR to buy a new tractor, meaning that Agricultural Minister Branislav Nedimović should be on track to keep his promise that all those who meet the requirements will be able to receive the subsidy.
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7)
Beef to be freely exported again from June 24th
June 6th, 2017, http://www.stips.minpolj.gov.rs/sadrzajv/govedina-od-24-juna-ponovo-na-slobodnom-re%C5%BEimu
All obstacles relating to the export of meat from Serbia to Russia have now been overcome, according to Agricultural Minister Branislav Nedimović. After meeting with Russian delegates at the St Petersburg International Economic Forum (SPIEF), Nedimović told news agency Tanjug that all the problems had now been solved and that from June 24th onwards, beef, pork and all other produce will be freely exported and imported between the two nations. However, he did clarify that the apple trade will still be closely monitored in order to prevent the possibility of commodities re-exportation.
8)
Serbia and Croatia launch organic production project
June 5th, 2017, http://www.agronews.rs/srbija-i-hrvatska-pokrecu-zajednicku-organsku-proizvodnju/
7) Serbia and Croatia launch organic production project June 5th, 2017, http://www.agronews.rs/srbija-i-hrvatska-pokrecu-zajednicku-organsku-proizvodnju/ Serbia and Croatia are to undertake a new two-year project of cross-border cooperation with regards to the development and improvement of products, services and brands in the organic market. Named ‘Organic Bridge’, the project is being spearheaded by the Croatian town of Valpovo and the physical research company Tera Tehnopolis in nearby Osijek. Meanwhile, the organization Teras (based in Subotica) will represent Serbian interests and all Serbian activity will be headquartered in the Center for Organic Production Selenča (COPS). The project is one of 24 that have been approved within the crossborder program between the two nations, selected from a total of 127 applications. Over the next 24 months, the project will comprise a series of activities on both sides of the border, with COPS planning to share experiences and knowledge of research, training and branding with their associates in Valpovo.
9)
Irrigation costs subsidized by provincial aid
June 2nd, 2017, http://www.rtv.rs/sr_ci/vojvodina/novi-sad/pokrajina-sufinansira-poljoprivrednike_829717.html
The Provincial Secretary for Agriculture Vuk Radojević has announced the sanction of 100 new grants which will provide 65 million RSD worth of subsidies for farmers buying equipment for irrigation and the construction of wells. Around 60% (40 million RSD) of that sum is being provided by the Secretariat, with the rest of the funds coming from the state. Since the beginning of 2017, 307 contracts worth a total of 250 million RSD have been agreed upon. That figure is expected to cover 1,700 hectares of irrigated land in the territory of Vojvodina. Radojević also said he expected the fund to be increased in line with adjustments to the Agrarian Budget.
10) Nedimović: All farmers cannot have the same pension May 30th, 2017, http://www.politika.rs/sr/clanak/381724/Svi-poljoprivrednici-ne-mogu-da-imaju-istu-penziju
For decades, irregularities within the Serbian pension system have meant that farmers who paid pension and disability insurance for just 15 years would receive the same amount as those who had done so for 40 years. Going forwards, the amount of pension should correspond to the years of contribution and retirement payments, says Branislav Nedimović, Minister of Agriculture, who insists his Ministry is working hard to find solutions to this and other problems within existing legislation. In particular, the Ministry is looking to find a solution for those farmers whose pension is currently less than 100 EUR per month. Page 4
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The latest figures show that in Serbia, 29,438 farmers are receiving less than the minimum pension, which is equivalent to 10,735.97 RSD. 145,802 farmers collect that minimum amount, while around 10,653 farmers earn the average pension of 29,383 RSD. Another irregularity which the Ministry is investigating is the fact that a farmer with one hectare of land currently has to pay the same contribution as one with 100 hectares, a problem which Nedimović says he is not aware of in other countries. Meanwhile, the outstanding debt of farmers for non-payment of taxes and contributions to the pension and disability insurance fund currently stands at 186 billion RSD. In order to make such an exorbitant sum more manageable, Nedimović has proposed that interest accumulated on the debt should be waived, but that debtors must still pay the original amount.
Foreign Aid 11) Construction begins on Sjenica indoor city market June 23rd, 2017, http://www.glaszapadnesrbije.rs/vest261362.html
After two years of extensive planning, work has finally begun on the construction of an indoor city market in the town of Sjenica. The building will be located at the site of the existing green market and will command a total value of 420,000 EUR, with 300,000 EUR of that sum coming from the UN’s European Partnership with Municipalities Program (PROGRES) and the remainder being funded by the municipal budget. Stretching over an area of 1,400m2, the market will be divided into three parts. The first and most important part will be an indoor area devoted to milk and meat produce, which will contain modern cooling cabinets and will comply with safety standards as outlined by the relevant European bodies. The central area will be covered from the elements and will house the green market, while the outdoor area is designated for commodity markets. The project is expected to take 18 months to complete and once operational, the market will be open 365 days of the year.
Private Sector 12) Arab company invests 23 million EUR in irrigation June 23rd, 2017, http://agrovizija.rs/Index.php?id=3032
United Arab Emirates (UAE) company Al Ravafed has announced it will begin work on a 65km irrigation system servicing 10,430 hectares in Gajdobra, Karadjordjeva and Sivac as soon as the year’s crops have been harvested. The project is expected to cost 2,000 to 3,000 EUR per hectare, working out to a total of 23 million EUR and will be the largest irrigation system of its kind in Serbia upon its completion. Dragan Crnjanski, the executive director of the Arab company in Serbia, is hopeful that between 60% and 70% of the system will be in place in time for the next sowing season. As well as bolstering the performance of traditional crops such as wheat, sunflower and soybeans, the irrigation system is also being introduced to comply with the demands of major corn seed producers. Having first arrived in Sivac in 2014, Al Ravafed initially encountered resistance to foreign investment and concerns about the ethics of the business. However, they have since established themselves as a socially responsible company, donating more than 30,000 EUR to charitable causes. They are also responsible for introducing silk bags into Serbia as a method of storing wheat.
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13) Wheat yields down 25% from last year June 23rd, 2017, http://beta.rs/ekonomija/ekonomija-srbija/66435-pocela-zetva-psenice-u-srbiji-prinosi-do-25-odsto-manjinego-lane
The first wheat harvests of the year have shown yields of around four tons per hectare, which is a decrease of 25% compared to 2016. With around 540,000 hectares of wheat planted across Serbia, scientific advisor at the Institute of Field and Vegetable Crops Novica Mladenov estimates a total yield of just over two million tons, which is similar to the years 2011 and 2012. However, that would represent a significant drop-off from last year’s record total of 2.88 million tons. Mladenov puts the lower yield down to late sowing periods and adverse climate conditions, but does not expect the weather to play a further part in wheat’s performance, since it is now in its final stage of ripening. However, not everyone agrees with his estimates. Dragisa Petrović, who is the director of the Belgrade-based agricultural company PKB Corporation, projects average yields of five to six tons per hectare for his company’s 3,200-hectare area. Petrović cites the example of PKB’s barley yield, which is currently sitting at 6.1 tons per hectare after harvesting half of the 1,500 hectares devoted to the crop.
14) Banks begin to turn to agriculture June 18th, 2017, https://www.dnevnik.rs/ekonomija/poljoprivreda/banke-pocele-da-se-okrecu-poloprivredi-18-06-2017
The first five months of 2017 have seen a slight growth in the agricultural banking sector, with a 5.3% increase of activity in registered holdings from the Credit Bureau of the Association of Banks. The total amount of loans was also up by 2.72 billion RSD from last year, reaching 54.14 billion so far this year. In response to this growing demand, and coupled with a dearth of customers elsewhere, Serbian banks are beginning to turn their attention to the agricultural sector and are offering incentives to try and claim a portion of this niche market. The Nova Ljubljankska Banka (NLB), for example, provides teams of agricultural advisors with experience in the industry. Last year, they set aside two million EUR for the project; this year, that figure has risen to 50 million EUR. They also hold an annual competition for the best organic producers from all over Serbia; the top three candidates are rewarded with a prize and this year they have already received 67 applications. Meanwhile, Kredi Agrikol has designed a special ‘Agro Grand Prix’ card, with which farmers can receive a discount on fuel at gas stations across the country. They also offer investment loans specifically geared towards agriculture, as well as a specialized weather forecast service for their customers.
15) Serbia spends nine million USD on imported hazelnuts June 13th, 2017, http://www.danas.rs/ekonomija.4.html?news_id=348224&title=Na+uvoz+le%C5%A1nika+potro%C5%A1imo+oko+devet+milion a+dolara
Dr Zoran Keserović, director of the Department of Fruit Growing at the Faculty of Agriculture in Novi Sad, estimates that Serbia imports as much as nine million USD’s worth of hazelnuts each year, mostly from Turkey. This is despite the fact that there are 1,200 hectares of forested areas registered with the Ministry of Agriculture for hazelnut production, with an annual yield of 5,000 tons. Conditions in Serbia are conducive towards growing the nut and although it’s not cheap to do so, a growing interest in the commodity from major confectioners such as Ferrero Rocher means it might make financial sense to increase hazelnut production on home soil.
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In order to properly cultivate hazelnuts, an upfront investment of approximately 6,000 EUR is needed to purchase the production materials. On top of that, additional costs of 15,000 EUR per hectare are necessary in order to maintain seedlings, provide protection and water the produce. As such, the nuts are not an inexpensive endeavor, which has traditionally put many farmers off growing them. However, Ferrero Rocher are working with the Ministry of Agriculture to provide incentives (including seminars, lectures, special contracts and financial aid) in order to encourage growth in the sector. Serbian produce is sought after largely due to its price; while a kilogram of hazelnuts is sold for around 2.20 EUR in Serbia, it can reach anywhere from 3.60 EUR to 6.50 EUR abroad. With better organization and cooperation between hazelnut farmers, Serbia can leverage this industry to its advantage.
16) High yield needed to keep sugar beet competitive June 2nd, 2017, http://www.danas.rs/ekonomija.4.html?news_id=347525&title=Posejano+oko+60.000+hektara+%C5%A1e%C4%87erne+repe
This year, around 60,000 hectares of sugar beet were planted in Serbia. Fluctuations in weather patterns (including extremely high temperatures in March and extremely low temperatures in April) have contributed to an uneven growth amongst plants and a 5-10% decrease in size from last year, according to the director of sugar manufacturing company Sunoko, Ljubisa Radenković. Changes in the global market, and in particular reforms to EU legislation surrounding sugar beet production quotas, mean that it is unfeasible to expect a rise in the price of Serbian sugar. Instead, Radenković says, Serbia must stay competitive with an improved yield per hectare. Although there are some producers who regularly deliver yields of 11 and 12 tons per hectare, the national average is far lower at between 9 and 10 tons per hectare. In comparison to much of western Europe that is a relatively low return, meaning there is a large scope for improvement. Additionally, Radenković believes that an amendment to government policy allowing producers to lease state-owned land on long-term contracts would also contribute to increased competitiveness, as it would facilitate production and protection of the crop on a larger scale.
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Prepared by Business & Finance Consulting (BFC) www.bfconsulting.com Articles are taken directly from local sources without any fact-checking; they are provided as a convenience and for informational purposes only. Business & Finance Consulting (BFC)’s editing is limited to providing a short summary in English of the texts, highlighting the main points of the original articles. All rights reserved by the authors. BFC takes no responsibility and does not make any representation or warranty, express or implied, or assume any responsibility whatsoever for the content, accuracy, and reliability, or completeness of any of the articles.