#53 Serbia Agriculture Bulletin, BFC

02/2020

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53 S e r b i a Agriculture Bulletin New rules governing small vegetable producers go into effect Serbia tightens conditions for pork and meat imports USD 50 million World Bank loan to improve agricultural competitiveness Meeting held to discuss lifting Russian restrictions on Serbian pork

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Agriculture Finance Bulletin Edition #53, February 2020

Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6) 7) 8)

Ministry of Agriculture guide highlights LEADER approach to rural development ......................... 2 New rules governing small vegetable producers go into effect ...................................................... 2 RSD 17 million in incentives for local development strategies ....................................................... 2 Serbia tightens conditions for pork and meat imports ................................................................... 2 State strategy for wine industry development expected to be adopted ........................................ 3 Cooperatives vital for the survival of 570,000 Serbian farms ......................................................... 3 Plan to allow farmers to buy cattle with milk, bulls and calves ...................................................... 3 Vojvodina announced RSD 10 million for digitizing agriculture ...................................................... 3

Foreign Aid ................................................................................................................. 4 9) 10) 11) 12)

New EBRD loan to support Serbian SMEs ....................................................................................... 4 GIZ launches new tools for better export from the Balkans ........................................................... 4 USD 50 million World Bank loan to improve agricultural competitiveness .................................... 4 Serbian companies participate at Berlin fruit fair ........................................................................... 4

Private Sector.............................................................................................................. 5 13) 14) 15) 16) 17) 18) 19)

Meeting held to discuss lifting Russian restrictions on Serbian pork .............................................. 5 Agricultural export markets need to expand .................................................................................. 5 Cattle, pig numbers up; sheep, goat, poultry numbers down ........................................................ 5 Berry producers ask state to mediate dispute with processors ...................................................... 5 Sunflower production likely to be less this year ............................................................................. 6 Only 1.4% of arable land irrigated ................................................................................................... 6 Warm winter could negatively impact fruit production.................................................................. 6

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 »

BFC Max-Högger-Strasse 6 CH-8048 Zurich, Switzerland

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State Initiatives 1)

Ministry of Agriculture guide highlights LEADER approach to rural development

February 26th, 2020, https://agrosmart.net/2020/02/26/vodic-za-osnivanje-lag-nosioca-razvoja-ruralnih-podrucja-u-srbiji/

The Ministry of Agriculture has prepared the Guide for the Establishment of Partnerships for Territorial Rural Development and the Preparation of Local Rural Development Strategies, which contains practical guidance and information aimed at local rural development through the LEADER approach. The aim of the Guide is to qualitatively prepare and implement local rural development strategies.

The LEADER approach is an innovative approach based on rural development strategies that are adopted and implemented locally by local actors, with support provided by relevant institutions. This approach enables innovative solutions to be developed as each strategy is tailored to the development of specific areas (i.e. small territories) and takes into account the local strengths and weaknesses as well as the specific needs of the population of those areas.

2)

New rules governing small vegetable producers go into effect

February 22nd, 2020, https://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html

New rules set under the Ordinance on the Conditions of Food Hygiene now allow for small vegetable food producers to be able to legally sell local specialties without meeting stringent business conditions.

The new rules state that such producers are allowed to sell their products if they meet certain requirements, including registering as an entrepreneur and paying a flat tax (the amount varies based on volume and location of production). Specific guidelines regarding the conditions of these rules are being developed, and the state plans on providing assistance to such producers via its agricultural extension services. The goal of the new regulations is to provide those involved in the production of small quantities of food of plant origin to be able to legally operate while still ensuring the safety of food products in the country. The new rules are modeled after the European Union.

3)

RSD 17 million in incentives for local development strategies

February 21st, 2020, http://www.rtv.rs/sr_ci/drustvo/za-strategije-lokalnog-razvoja-17-miliona-dinara_1095892.html

The Ministry of Agriculture and the Agrarian Payments Authority have signed contracts with representatives of territorial rural development partnerships for incentives worth more than RSD 17 million. The incentives were approved on the basis of a public call for support for programs related to the preparation and implementation of local rural development strategies that are in accordance with the LEADER approach. According to a statement from the Ministry of Agriculture, the preparation and implementation of local rural development strategies in line with the LEADER approach is a significant measure of rural development that addresses specific problems at the local level.

4)

Serbia tightens conditions for pork and meat imports

February 20th, 2020, http://www.politika.rs/scc/clanak/448328/Srbija-poostrila-uslove-za-uvoz-svinjskog-mesa-i-preradevina

Serbia has introduced a directive aimed at control and eradicated African swine flu within its territory.

The directive includes two main measures: (1) zoning areas affected by the disease and restricted the movement of pork from them and (2) tightening controls over the import of all pork deliveries. The second measure requires that pork be accompanied by certificates proving that the shipment has been inspected and meets International Organization for Animal Health, European Commission Serbian rePage 2

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quirements. Note that pork imports from countries with a previous outbreak of the disease is still permitted, provided that there has not been an occurrence of the disease within the last three years and/or the country of import has implemented its own zoning measure to confine the spread of the disease.

5)

State strategy for wine industry development expected to be adopted

February 14th, 2020, http://www.stips.minpolj.gov.rs/srl/vest/strategija-za-razvoj-vinarstva-i-vinogradarstva-do-kraja-februara

Prime Minister Ana Brnabic has announced that the state’s Strategy for the Development of Wine and Viticulture 2020-2030 is expected to be adopted in the near future. The Strategy will aim to boost Serbia’s wine industry, including boosting production, quality and export potential.

6)

Cooperatives vital for the survival of 570,000 Serbian farms

February 12th, 2020, https://beta.rs/ekonomija/ekonomija-srbija/123014-krkobabic

According to Minister for Regional Development Milan Krkobabic, cooperatives represent the best chance of survival for 570,000 agricultural farms in Serbia. In this respect, the state’s 500 Cooperatives in 500 Villages program is an important measure that is proving successful. Since its inception in 2017, the program has helped finance 152 cooperatives. Moreover, a total of RSD 580 million has been earmarked for the further revitalization of cooperatives in 2020, with a public competition for the allocation of these funds expected in the first half of the year.

7)

Plan to allow farmers to buy cattle with milk, bulls and calves

February 8th, 2020, https://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html

The Ministry of Agriculture is working on an agreement with the Hungarian firm Huland that will allow farmers to purchase dairy cows under special terms. Under the terms of the proposed agreement, farmers will be offered the chance to buy 10-20 head of cow by giving 20% of the cost in advance. The purchase contract then stipulates that farmers can subsequently pay the remaining 80% using milk, fattened bulls or calves. The agreement is being designed to help medium-sized households develop their farms with quality cows. If successful, the Ministry of Agriculture plans on pursuing similar measures with for the procurement of sheep.

8)

Vojvodina announced RSD 10 million for digitizing agriculture

February 1st, 2020, https://agrosmart.net/2020/02/01/pokrajina-daje-10-miliona-dinara-za-razvoj-digitalizacije

The Vojvodina Provincial Secretariat for Agriculture has announced the allocation of RSD 10 million for the continuation of the Monitoring Using Remote Sensing in Agriculture, Water Management and Forestry project, which aims to further the digitization of the agricultural sector in the region. To this end, the Secretariat has signed a research and development contract with Biosens Institute for the development of a digital agricultural platform that will allow for easier and more efficient monitoring of all tenders for grants. The platform will also incorporate satellite imagery and other crop-related data, including soil fertility and composition, to inform land analyses.

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Foreign Aid 9)

New EBRD loan to support Serbian SMEs

February 24th, 2020, https://www.ebrd.com/news/2020/ebrd-eu-and-banca-intesa-belgrade

Small- and medium-sized enterprises (SMEs) in Serbia will benefit from better access to finance thanks to a EUR 15 million EBRD loan to Banca Intesa Belgrade for on-lending to private businesses. Specifically, SMEs will be able to apply for loans to invest in environmental protection, worker safety and product quality and safety that are in line with European Union (EU) standards. Moreover, at least 60% of the total loan amount must be used for investments related to green technology and energy efficiency. In addition to the loans, SMEs can benefit from EU-funded cashback grants worth up to 15% of the total investment.

10) GIZ launches new tools for better export from the Balkans February 19th, 2020, http://www.agronews.rs/giz-startovao-nove-alate-za-bolji-izvoz-sa-zapadnog-balkana/

A new database of distributors has been developed under the German Organization for International Cooperation (GIZ) Increasing Export Potential of Small- and Medium-Sized Enterprises in the Western Balkans Region 6 project to provide local companies with information on regional and European distributors, wholesalers, retailers, importers and processors. The database should help Serbia’s exportoriented economy expand and reach new markets. Another service was also launched to aid in this effort. The Euromonitor International tool is an international market analysis tool that provides access to information on the markets of Austria, Belgium, Germany, the Netherlands and Sweden. The tool offers unique access to industry, country and consumer business data and also identifies future trends. Both the database and the tool will be regularly updated and expanded over time.

11) USD 50 million World Bank loan to improve agricultural competitiveness February 6th, 2020, http://www.stips.minpolj.gov.rs/srl/vest/srpskim-poljoprivrednicima-uskoro-dostupno-50-miliona-dolara

Serbia and the World Bank have reached an agreement for a USD 50 million loan for improving the competitiveness of agriculture, with the bulk of funds targeting the fruit, vegetable and start-up sectors.

An additional emphasis will be placed on devastated areas in Southern and Eastern Serbia. Loan funds are expected to become available within the next seven months.

12) Serbian companies participate at Berlin fruit fair February 3rd, 2020, http://www.tanjug.rs/full-view_en.aspx?izb=534441

For the second straight year, Serbian companies were represented at Fruit Logistica, Berlin’s international fresh fruit and vegetable fair. In total, 12 Serbian companies participated at the fair, united under the “Serbia Does Fruit” brand. The fair represents an important showcase for Serbian producers as it attracts approximately 3,200 exhibitors and 80,000 visitors every year.

Organization support for the participation of Serbian companies at the fair was provided by the USAID Competitive Economy Project, the Chamber of Commerce, the Industry of Serbia and the Development Agency of Serbia.

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Private Sector 13) Meeting held to discuss lifting Russian restrictions on Serbian pork February 19th, 2020, http://www.agronews.rs/rusija-ukida-ogranicenja-na-uvoz-svinjetine-iz-srbije/

Ministry of Agriculture Bogdan Igic has met with the head of the Russian Federal Service for Veterinary and Phytosanitary Surveillance to discuss lifting the restrictions Russia placed on Serbian pork imports in August of last year. The restrictions were placed last year due to concerns over African swine flu. Both sides agreed that the Minister would send the Russian Embassy in Belgrade Serbia’s map of infected areas, demonstrating that the disease is not present in meat producing regions. Following this, another meeting will be set up to determine a possible path forward. At the meeting, the two sides also discussed increasing imports of Russian agricultural products into Serbia, especially cereals, meat, fish and dairy products.

14) Agricultural export markets need to expand February 18th, 2020, http://www.stips.minpolj.gov.rs/srl/vest/usporavanje-izvoza-poljoprivrednih-proizvoda

According to the Statistical Office of the Republic of Serbia, the total gross value of Serbian agricultural production in 2018 was USD 5.5 billion, a 16% year-on-year increase. Most of this increase was due to increased cereal, industrial plant and fruit production, with slight decreases to vegetable and livestock production. This, however, has not translated into increased agricultural export performance as higher amounts of cereals do not necessarily bring better profits, especially when sales prices fall significantly.

In fact, if the structure of exports does not change, chances are good that foreign trade results of Serbian agriculture will get worse year after year. To ensure sustained (and even increased) results, Serbia must expand into new markets outside of its traditional markets in the European Union, CEFTA countries and Russia. Only then will it be able to command the best prices for production.

15) Cattle, pig numbers up; sheep, goat, poultry numbers down February 16th, 2020, https://agrosmart.net/2020/02/16/raste-broj-goveda-i-svinja-a-opada-ovaca-koza-i-zivine/

According to data published by the Statistical Office of the Republic of Serbia, the total number of cattle and pigs in the country increased (by 2.3% and 4.0% respectively) from the period of December 1, 2018 through December 1, 2019. 46.2% of all cattle in the country are found in the region of Sumadija and in Western Serbia. 42.4% of all pigs in the country are found in the region of Vojvodina.

During the same period, the total number of sheep, goats and poultry decreased, by 4.1%, 2.4% and 2.8% respectively.

16) Berry producers ask state to mediate dispute with processors February 14th, 2020, http://rs.n1info.com/Biznis/a569404/Proizvodjaci-malina-i-kupina-traze

The Association of Raspberry and Blackberry Producers of Serbia is asking the state to mediate a dispute between producers and purchasers regarding purchase prices as soon as possible so that market conditions are known to all before the processing season begins. The dispute stems from producers seeing their profits fall while also observing the price of processed products rise. This is especially important for producers as weather events damaged as much as 30% of their harvest, meaning that prices should rise under normal market conditions.

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17) Sunflower production likely to be less this year February 12th, 2020, https://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html

Based on the economic results of last year, Vukosav Sakovic, director of the Cereals of Serbia Association, is predicting some changes as to what will be grown on agricultural land this year. Specifically, the expert notes that the area used to grow sunflowers is expected to decline this year to approximately 200,000-220,000 hectares. At the same time the area used to grow corn is expected to remain roughly the same at approximately 1 million hectares, while the area used to grow soybeans could see a small increase to approximately 24,000 hectares. Of course, it is still early in the year, and plans could change.

18) Only 1.4% of arable land irrigated February 4th, 2020, http://www.stips.minpolj.gov.rs/srl/vest/sve-manje-zemljista-pod-sistemima-za-navodnjavanje

Serbia signed a USD 100 million loan agreement with the Abu Dhabi Development Fund six years ago for the development of the country’s irrigation system; however, only 1.4% of Serbia’s 3.4 million hectares of arable land was irrigated as of last year. Despite the slow progress, Agriculture Minister Branislav Nedimovic noted the country’s plan to move forward with further measures to increase the amount of irrigated land in the country. He noted that work on the first phase of the project funded by the Abu Dhabi Development Fund loan is coming to an end and that the second phase is under development.

19) Warm winter could negatively impact fruit production February 2nd, 2020, https://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.htm

A lack of soil moisture caused by an unusually warm winter season is threatening Serbia’s fruit harvest for this year. Unless snow or some significant rain appears in the near future, the low level of soil moisture is likely to lead to lower fertility, smaller fruits and a reduced harvest. In an industry heavily driven by supply and demand to set prices, this means that fruit prices this year could become more expensive than ever before.

Experts point out that this is all still speculation at this point and that the situation could change, especially if the weather turns in the next month to provide more favorable soil conditions for fruit.

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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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