#50 Serbia Agriculture Bulletin, BFC

11/2019

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50 S e r b i a Agriculture Bulletin Directorate for Agrarian Payments to transform into payment agency Draft 2020 budget allocates RSD 52 billion for agriculture Vojvodina Development Fund helps farmers access IPARD funds Open letter: tycoons threatening Serbian agriculture

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Agriculture Finance Bulletin Edition #50, November 2019

Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6)

300 applications received under 500 Cooperatives in 500 Villages competition ........................... 2 Directorate for Agrarian Payments to transform into payment agency ......................................... 2 Draft 2020 budget allocates RSD 52 billion for agriculture ............................................................. 2 National laboratory established to control milk quality ................................................................. 2 Ministry of Agriculture plans continued support for cattle industry .............................................. 3 National wine strategy under development ................................................................................... 3

Foreign Aid ................................................................................................................. 3 7) 8)

Vojvodina, EBRD officials meet, discuss possible investments in water system............................. 3 Vojvodina Development Fund helps farmers access IPARD funds .................................................. 3

Private Sector.............................................................................................................. 4 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20)

African swine flu vaccinations to cease by year’s end .................................................................... 4 Agricultural insurance levels extremely low.................................................................................... 4 Production of industrial hemp grows five-fold in Serbia................................................................. 4 Meat industry suffering from African swine flu-related market restrictions .................................. 4 Open letter: tycoons threatening Serbian agriculture .................................................................... 5 Local company developing modern cattle health sensors .............................................................. 5 EU audit reveals issues with Serbian controls over fruits ............................................................... 5 430,000 hectares of fall wheat sown so far .................................................................................... 6 Study on Serbian viticulture and winemaking released .................................................................. 6 Food industry shows two-month decline of greater than 5% ......................................................... 6 Corn and wheat yields increasing but could be higher ................................................................... 6 Serbia among world’s largest grain exporters................................................................................. 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.

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BFC. Agriculture Finance Bulletin.

State Initiatives 1)

300 applications received under 500 Cooperatives in 500 Villages competition

November 27th, 2019, http://www.stips.minpolj.gov.rs/srl/vest/zadrugama-667-miliona-dinara-za-unapredenje-proizvodnje

Nearly 300 applications have been submitted for the third competition of the 500 Cooperatives in 500 Villages project. There are RSD 667 million available for this competition, enough to fund approximately 58 applications. To qualify, cooperatives must have obtained the approval of the municipality in which they operate.

2)

Directorate for Agrarian Payments to transform into payment agency

November 25th, 2019, https://www.ekapija.com/en/news/2700384/directorate-for-agrarian-payments

The Directorate for Agrarian Payments is being transform into a payment agency, a move in line with the Action Plan for Chapter 11: Agriculture and Rural Development. This will mean that the Directorate will be equipped with better technology and also have a greater degree of independence and efficiency. The transformation will also include the establishment of regional offices in several Serbian towns.

The move is part of Serbia’s effort to align with the European Union (EU)’s Common Agricultural Policy, which requires the capacity to deliver direct agricultural-related payments.

3)

Draft 2020 budget allocates RSD 52 billion for agriculture

November 12th, 2019, http://www.rtv.rs/sr_ci/ekonomija/aktuelno/koje-subvencije-dogodine

The draft budget for 2020 has earmarked RSD 52 billion for the Serbian agricultural sector, with the obligatory amount for subsidies not less than RSD 35.6 billion (RSD 900 million more than in 2019).

Agriculture Minister Branislav Nedimovic noted that, in 2020, special support measures are expected to be introduced for young farmers, for organic production and for winemakers. The Minister also emphasized the importance of livestock breeding, especially the need to import calves with superior genetics. He added that a law on price regulation in the agricultural market is also being prepared, which he expects to be adopted next year.

Since 2016, the state budget directed at the agricultural sector has increased 45%, indicating the importance the state places on the development of the sector to the overall well-being of the country and its economy.

4)

National laboratory established to control milk quality

November 6th, 2019, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html

A national reference laboratory has been set up, paving the way for quality to be a determining factor in the price of milk. Expected to begin in quarter 3 next year, twice-monthly on-the-spot inspections will be performed by the national reference laboratory in a special vehicle and determine the premium amounts the state will pay.

The development of animal husbandry in the country has been a focus of the state in recent years. The increased scrutiny of milk quality is expected to provide a boost to the development of the country’s dairy industry.

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5)

Ministry of Agriculture plans continued support for cattle industry

November 5th, 2019, http://www.agronews.rs/dodatna-podrska-za-uzgajivace-goveda/

Agriculture Minister Branislav Nedimovic has announced that the opening of Chinese and Turkish markets has produced greater demand for Serbian beef. As a result, the Ministry plans to further encourage and support the country’s beef and dairy producers. This includes a continuation of direct financial incentives given per head as a way to encourage further investments in the industry. The Minister specifically noted the importance of continuing to align Serbian practices and standards with the European Union (EU)’s Common Agricultural Policy as well as the importance of the cattle industry in taking advantage of available IPARD funding.

6)

National wine strategy under development

November 2nd, 2019, https://agrosmart.net/2019/11/02/vinska-strategija-pomoci-ce-vinarima-da-stignu-do-kupaca/

With Serbian wines increasing in worldwide prestige, the government is taking action to support the industry as part of a ten-year wine strategy that hopes to boost wine production and exports.

Specifically, the state plans to increase subsidies to winemakers for the procurement of seedlings, equipment and machinery as well as create a national brand to boost international awareness about the superior quality of Serbian wine.

Foreign Aid 7)

Vojvodina, EBRD officials meet, discuss possible investments in water system

November 21st, 2019, https://agrosmart.net/2019/11/21/pokrajina-i-ebrd-povecavaju-broj

During a meeting with representatives from the European Bank for Reconstruction and Development (EBRD), Vojvodina Provincial Deputy Prime Minister Djordje Milicevic discussed possible investments in the water management system in Vojvodina. Specifically, the two sides discussed the further reconstruction of the canal network, investments in irrigation reservoirs and field electrification. This is considered an important measure for the region as only 4-5% of arable land in the region is irrigated, a concerningly low figure given the impact climate change is expected to have in the coming years.

Milicevic hopes that EBRD assistance in this matter will ensure better conditions for farmers and ultimately lead to higher profits.

8)

Vojvodina Development Fund helps farmers access IPARD funds

November 14th, 2019, http://www.agronews.rs/krediti-razvojnog-fonda-vojvodine-za-ipard-sredstva/

Vojvodina farmers can count on the support of the Vojvodina Development Fund to access IPARD agriculture pre-accession funding. Specifically, the Fund will offer Vojvodina farmers favorable loans in order to have the own resources necessary to access IPARD funding.

Credit lines from the Fund are available for up to seven years, with a grace period of up to two years.

Interest rates are fixed at 1-3%, and there are no additional loan costs. In total, the Fund has RSD 2.5 billion available for such credit lines.

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BFC. Agriculture Finance Bulletin.

Private Sector 9)

African swine flu vaccinations to cease by year’s end

November 25th, 2019, https://www.danas.rs/ekonomija/africka-svinjska-kuga-ne-mora-biti-fatalna-za-izvoz-mesa/

Serbian farmers will stop vaccinating pigs against African swine flu by the end of the year. Following this, a monitoring period will determine whether or not there is a need for continued vaccination and containment efforts. Assuming everything goes according to plan, Serbia will then be declared a diseasefree country, which opens the way for the renewed export of pork and pork-based products to the European Union (EU) and Russia. Serbia must, however, remain vigilant as the disease is extremely resistant and easily transmitted. As Serbia has elected to establish disease-free zones until the country is declared disease-free, it will remain important for inspectors to prevent meat smuggling from infected areas in order to maintain the integrity of the meat industry and its products, especially those meant for export.

10) Agricultural insurance levels extremely low November 22nd, 2019, http://www.glaszapadnesrbije.rs/vest986584.html

Although different parts of Serbia are affected by natural disasters each year (drought, floods, frost, etc.), only 3% of individual farmers and only 9% of companies and cooperatives are insured against such damages. Most have a long-standing distrust of insurance companies, and the small number of appraisers also gives farmers concerns about the reliability of agricultural insurance.

11) Production of industrial hemp grows five-fold in Serbia November 22nd, 2019, http://www.balkanspress.com/index.php/vesti/ekonomija/

Last year, industrial hemp was only grown on 60 hectares in Serbia. Just one year later, that number has jumped to 300 hectares. Such growth is an important step toward Serbia being able to enter the world market, where demand for industrial hemp is high. If the country can boost production areas to 1,000 hectares, Serbia can start providing the product to worldwide markets that use it for a wide variety of purposes, including nutritional, pharmaceutical and medical purposes. In fact, more than 24,000 products can be made from the plant.

As interest in the product grows within the country, it will be important for government authorities to act quickly to develop and pass a law on psychoactive substances that better regulates the transposition and storage of hemp as well as makes it easier for farmers to produce and process it.

12) Meat industry suffering from African swine flu-related market restrictions November 21st, 2019, https://beta.rs/ekonomija/ekonomija-srbija/119607

Producers of meat and meat products in Serbia are facing a crisis caused by severe restrictions on exports to regional, European and world markets due to the occurrence of African swine flu, which has significantly reduced revenues (by up to 40% for some companies). African swine flu has caused many markets to ban the import of meat products not treated at temperatures above 80 degrees Celsius. The industry has been hardest hit by export bans from Bosnia and Herzegovina, Montenegro and Northern Macedonia, traditionally the largest markets for Serbian pork products.

Meat producers are working hard to find the best response to this situation and calling on appropriate Ministries to provide expert assistance. For their part, the Ministry of Agriculture has noted that there are ongoing tests for African swine flu around the country, which should end by December 15. The end result of this testing, which is being carried out according to a European Commission (EC) monitoring Page 4

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plan, is the creation of disease-free zones, which should help some export activities resume. The Ministry also hopes that, with the cessation of vaccinations, the process of obtaining a designation as a disease-free country can also begin. In the meantime, the Ministry stated that they are also working to open up new markets for meat exports.

13) Open letter: tycoons threatening Serbian agriculture November 21st, 2019, https://www.danas.rs/ekonomija/tajkuni-razaraju-srpski-agrar/

Small-scale cattle producers from villages in Sabac have sent an open letter to President Vucic expressing concerns over issues affecting them. Specially, they warn that the price of bulls is dropping to an unsustainable level (losing about EUR 300 per bull per year) and that subsidies given to offset this are now arriving one year too late. They also question why Serbian beef is being exported to Turkey when (unofficially) third-category beef is being imported from the European Union (EU) to provide for the nutritional needs of the Serbian people. The letter states that a similar situation is occurring with pigs. It concludes that Serbian peasant farmers are under attack by agricultural tycoons, who could be threatening the prosperity of Serbia’s agricultural sector as a whole.

14) Local company developing modern cattle health sensors November 20th, 2019, http://www.agronews.rs/farm-fit-startap-koji-razvija-senzore-za-zdravstveno-stanje-goveda/

Farm Fit, a domestic startup whose members work to develop internet of things (IoT) devices that monitor the health of cattle and send notifications if something goes wrong, was created as part of the Science and Technology Park in Belgrade this past July. Now, the startup is working to provide farmers with round-the-clock solutions that ensure farmers have the time to adequately respond to disease threats. In this context, Farm Fit is working with expert mentors to fully develop the idea under the BioSense Accelerator Program.

The solution under development represents an important development for the cattle industry in Serbia as well as the global cattle industry. In total, there about 120 million cattle farms in the world, with 600 million people engaged at some level in the industry.

15) EU audit reveals issues with Serbian controls over fruits November 19th, 2019, https://www.foodsafetynews.com/2019/11/eu-audit-finds-issues-with-serbian-controls-of-fruit/

According to a recently-released audit report, most soft fruits exported from Serbia to the European Union (EU) are not subject to official controls at primary production levels. Specifically, the audit found that official controls to address potential microbiological risks at primary production are only partly-risk based and are only carried out at a low frequency. Additionally, there are also no official controls, such as sampling, after freezing to verify compliance with EU food safety standards, and there is little official verification of the controls of processors or exporters. At the same time however, risks are reportedly mitigated through third-party certification of international food safety standards and inspections and audits from EU importers.

In response, Serbian authorities said a plan of official controls covering microbiological risk in primary production will be created by the end of January 2020. Officials also said new rules adopted in the first quarter of next year will specify a number of samples to be taken after freezing.

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16) 430,000 hectares of fall wheat sown so far November 18th, 2019, https://beta.rs/ekonomija/ekonomija-srbija/119475-psenicom-u-srbiji-zasejano-430-000

In the past seven years, Serbia has sown 550,000-650,00 hectares of fall wheat each year. This year, however, only approximately 430,000 hectares have been sown so far, although more is still being sown in central Serbia. Earlier signs show that this year’s harvest is in a good condition, with about 50% of the sown area already sprouting (much better than last year’s 5% at this time).

Despite the good condition of the wheat at this points, experts caution producers not to expect any significant increase in wheat prices as six of the last seven years have been a record high worldwide in terms of grain production.

17) Study on Serbian viticulture and winemaking released November 18th, 2019, http://www.agronews.rs/dostupna-studija-o-vinogradarstvu-i-vinarstvu-srbije/

A detailed study on Serbia's viticulture and winemaking has recently been released on the official website of the Center for Viticulture and Enology. The study offers a wealth of interesting data, including information on total grape and wine production, vineyard growth over the last 20 years, import and export data, climatic conditions and grape quality over the last three harvests.

18) Food industry shows two-month decline of greater than 5% November 12th, 2019, http://rs.n1info.com/Biznis/a543089/Par-prehrambrene-industrije.html

The food industry in Serbia declined 5.6% in August and 7.3% in September, concerning figures that likely represent a combination of the results of Kosovan taxes, low export prices and African swine flu.

Within the food industry, the meat industry, which showed a growth of 4-5% last year and through the first half of this year, has also declined, dropping 7% in August and even more in September.

19) Corn and wheat yields increasing but could be higher November 11th, 2019, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html

Average yields of corn and wheat are on the increase, reaching 5.6 tons (up 26%) and 4.4 tons (up 18%) respectively. Despite such positive progress, experts point out that Serbian corn and wheat yields are still not optimal, falling 20% shy of European Union (EU) averages. Such lost potential represents as much as USD 200 million in potential revenue lost each year (at current prices in the global market). But increasing yields would also require investments in storage and transportation logistics. Serbian agricultural producers, including producers of corn and wheat, also need to make investments to combat the effects of climate change, especially increased temperatures and reduced rainfalls.

Serbian exports of cereals and oilseeds have become an important part of the country’s agricultural sector, reaching USD 800 million (25% of all agricultural exports) in 2019. Much progress in this direction is due to support measures offered by the Food and Agriculture Organization of the United Nations (FAO) and the European Bank for Reconstruction and Development (EBRD).

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20) Serbia among world’s largest grain exporters November 1st, 2019, http://www.stips.minpolj.gov.rs/srl/vest/srbija-se-svrstala-medu-najvece-svetske-izvoznike-zita

Serbia has become one of the world's largest grain exporters, offering many benefits such as affordable transportation links connecting the Black Sea to the North Sea. In this capacity, Minister of Agriculture Branislav Nedimovic has announced that Serbia will be submitting an application for membership with the International Cereal Council. If approved, Serbia will become the 57th member country of the Council and the first in the region. Membership would allow Serbia to better understand market trends and global price fluctuations. At the same time, Serbia’s grain industry could benefit from further medium- and long-term investments, including investments in modernizing irrigation systems, responding to climate change, increasing export capacity and upgrading grain storage and transportation infrastructure.

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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.

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