#57 Serbia Agriculture Bulletin, BFC

07/2020

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57 S e r b i a Agriculture Bulletin Hunting tourism and game breeding have big potential in Serbia USAID program to strengthen Serbia’s food industry KfW support for energy efficiency and renewable energy loans USD 650 million inflow projected from fruit exports this year

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Agriculture Finance Bulletin Edition #57, June 2020

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

Hunting tourism and game breeding have big potential in Serbia ................................................. 2 Program strengthening the use of modern technologies in agriculture ......................................... 2 Minister of Environmental Protection calls for better attitudes toward land resources................ 2 New controversy arises over the price of wheat ............................................................................ 2 Rulebook on vineyard incentives adopted ...................................................................................... 3 Investments in the “five golden types of fruit” recommended in Serbia ....................................... 3 Cheese production has tremendous potential in Serbia ................................................................. 3

Foreign Aid ................................................................................................................. 4 8) 9) 10) 11) 12)

USAID program to strengthen Serbia’s food industry ..................................................................... 4 New meteorological stations to be installed to boost agriculture .................................................. 4 First public call for IPARD incentive funds under Measure 7 announced ....................................... 4 KfW support for energy efficiency and renewable energy loans .................................................... 4 Trial agricultural census conducted ................................................................................................. 5

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

Unused resources could be tapped for mushroom production ...................................................... 5 Only one in five tractors are “new” in Serbia .................................................................................. 5 30% of raspberry crops destroyed by storms.................................................................................. 6 Area sown with sugar beets up 25% ............................................................................................... 6 USD 650 million inflow projected from fruit exports this year ....................................................... 6 Crop dusting by drones for the first time in Serbia ......................................................................... 6 EUR 29.75 million in organic exports in 2019.................................................................................. 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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State Initiatives 1)

Hunting tourism and game breeding have big potential in Serbia

June 28th, 2020, https://beta.rs/ekonomija/ekonomija-srbija/129527

The National Team for the Revival of Serbian Villages is working to boost the popularity of hunting tourism and game breeding, which the Team considers as having a large potential. To this end, the Team has been encouraging investments (especially from Serbian repatriates) as well as lobbying the government to ease the conditions for establishing hunting grounds and provide incentives for breeding game.

Currently, Serbia has 38 established hunting grounds, which operate on a total area of 1.2 million hectares and have approximately 16,000 heads of game for hunting. Additionally, there are 17 active hunting lodges in the country, with a total capacity of 250 beds.

2)

Program strengthening the use of modern technologies in agriculture

June 27th, 2020, https://www.dnevnik.rs/vojvodina/agrobiznis

A two-year, cross-border agribusiness development program is currently being implemented to improve cooperation between agribusinesses in Serbia and Hungary. The main goal of the program is to establish and maintain a comprehensive cross-border system that encourages the development of farmers' competencies in applying modern technologies in agriculture. In particular, the program is focused on expanding the use of renewable energy and digital technologies on smaller and family farms as well as providing educational opportunities for farmers to better understand their uses and benefits.

The project, being implemented by the Pro Sciencia Naturae Foundation, had an initial budget of EUR 335,649 and received additional co-financing in the amount of EUR 285,302 from the European Union (EU).

3)

Minister of Environmental Protection calls for better attitudes toward land resources

June 26th, 2020, https://agrosmart.net/2020/06/26/nemaran-odnos-prema-zemljistu-pretvorice-ga-u-pustinju/

Speaking on the occasion of World Day, the Minister of Environmental Protection discussed the importance of taking appropriate measures to combat desertification, which he identified as one of the most destructive processes on the planet. In particular, the Minister called for the responsible use and protection of land, including through the use of afforestation. The Minister also expressed the need to raise general public awareness in order to change negligent and irresponsible attitudes towards land. To this end, the Ministry of Environmental Protection has started drafting the National Action Program for Combating Desertification and Land Degradation and Drought Mitigation, which aims to identify the factors and necessary practical measures needed to prevent further land degradation.

4)

New controversy arises over the price of wheat

June 18th, 2020, http://www.politika.rs/scc/clanak/456509/Nove-polemike-oko-cene-zita

New controversy has arisen surrounding a request from the Independent Association of Farmers of Serbia for the government to establish a minimum price of RSD 22 per kilogram for wheat ahead of this year’s harvest. The topic of state price guarantees is a contentious and often political one, with both sides ready to give lists of pros and cons. Proponents argue that such a measure will ensure the stability Page 2

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of producers’ incomes, especially in light of failed wheat crops caused by adverse weather conditions this year. Opponents argue that such a measure unduly influences market movements and causes tensions between producers and buyers. Initially, state authorities ignored the request; however, they recently discussed the matter at a Ministry of Agriculture meeting.

Current estimates have the price of wheat per kilogram at between RSD 16 and RSD 18; but producers need a price of RSD 20 per kilogram to prevent losses.

5)

Rulebook on vineyard incentives adopted

June 16th, 2020, http://www.stips.minpolj.gov.rs/srl/vest/donet-pravilnik-o-podsticajima-za-podizanje-vinograda

The Ordinance on Incentives for Raising Perennial Grape Production Plantations has been adopted. The Ordinance prescribes types of investment incentives that are eligible to receive state support (e.g. grape seedling procurement, vineyard preparation) as well as eligible parties (active entities registered in the Viticulture Register). The highest total amount of incentives a party can receive in one calendar year is RSD 80 million.

6)

Investments in the “five golden types of fruit” recommended in Serbia

June 9th, 2020, https://www.b92.net/biz/vesti/srbija.php?yyyy=2020&mm=06&dd=09&nav_id=1693288

The National Team for the Revival of Serbian Villages is recommending that Serbian repatriates invest in the production of “five golden types of Serbian fruits”, namely apples, blueberries, cherries, raspberries and strawberries. The Team stated that fruit production has proven itself to be a good model for increasing population standards as well as solving economic, social and demographic problems in the country. Moreover, fruit production helps other branches of the country’s economy by employing 10-20 times more labor force and providing them with higher average wages.

In discussing the call for increased investments in fruit production, the Minister for Regional Development called on producers to also further develop production and processing capabilities by joining forces into specialized fruit cooperatives. To this end, the Team is planning to organize educational visits for interested parties to the most successful fruit cooperatives in Serbia as well as provide them with expert advice on the best ways to form/join cooperatives.

7)

Cheese production has tremendous potential in Serbia

June 1st, 2020, https://beta.rs/ekonomija/ekonomija-srbija/128167

The National Team for the Revival of Serbian Villages has determined that cheese production represents a very profitable sector in Serbia and has great potential in the country as a way of adding two to three times the value of simple raw milk production. Of particular note is that Serbia does not have a single registered cheese factory specialized in making cheese under a protected geographical-origin certification. This despite producing and exporting nearly 100 million kilograms of dairy products worth nearly EUR 85 million.

With this understanding, there has been a call to move to both preserve and make economically viable traditional dairy products. Specifically, experts believe that the creation of indigenous products under a banner of geographic origin will help producers market quality traditional products both domestically and internationally. To accomplish this, producers will need to join forces under the umbrella of specialized cooperatives.

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Foreign Aid 8)

USAID program to strengthen Serbia’s food industry

June 16th, 2020, http://www.agronews.rs/pametna-specijalizacija-u-prehrambenom-sektoru-srbije/

The Competitive Economy Project of the United State Agency for International Development (USAID), in cooperation with the Ministry of Education, has announced a call for project proposals for the Implementation of the Smart Specialization Strategy in the Food Sector of Serbia program. The support is envisaged to innovate the food industry in ways that strengthen competitiveness in both domestic and foreign markets.

Small- and medium-sized enterprises registered in Serbia and active in the food, packaging or information and communication technologies industries are eligible to apply.

9)

New meteorological stations to be installed to boost agriculture

June 14th, 2020, https://www.danas.rs/ekonomija/nove-meteo-stanice-za-veci-prinos-u-poljoprivredi/

New meteorological stations will be installed within the Digitization of Municipal Land Management project being implemented by NALED and Telegroup, with additional support provided by German development cooperation GIZ. The stations, which will become a part of the AgroLIFE platform, will enable greater efficiency with regard to the planning and management of agricultural production on state-owned land managed by local governments. The stations will also help producers increase yields and optimize their usage of fertilizers, pesticides and water.

More than 45% of the total territory of Serbia is used as agricultural land, of which 515,000 hectares are state-owned land managed and leased by local governments. Practice has shown that, due to a lack of information, improper cultivation has led to a decline in the quality of fields over time. This project aims to stop and ultimately reverse that trend.

10) First public call for IPARD incentive funds under Measure 7 announced June 8th, 2020, http://uap.gov.rs/raspisan-prvi-javni-poziv-za-ipard-podsticaje-u-okviru-mere-7/

The first public call for applications under the Diversification of Agricultural Holdings and Business Development project was announced by the Directorate for Agrarian Payments. The project makes use of IPARD Measure 7 funding to spur approved investments for the development of rural tourism.

IPARD incentives can cover up to 65% of the cost of the total investment (less the value-added tax amount) in amounts ranging from EUR 5,000 to EUR 300,000. Applications will be accepted between July 1 and October 1.

11) KfW support for energy efficiency and renewable energy loans June 7th, 2020, http://subvencije.rs/vesti/krediti-u-saradnji-sa-nemackom-razvojnom-bankom/

Credit Agricole Bank, in cooperation with the German development bank KfW, is providing loans to finance energy efficiency and renewable energy projects that result in a reduction in primary energy consumption or a reduction of CO2 emissions of 20%. Loans are available to entrepreneurs, cooperatives, legal entities and registered agricultural holdings that have up to 250 employees and an annual turnover of up to EUR 50 million. Loans can be utilized for: equipment/machinery purchases, building investments, technology investments and/or other investments leading to a reduction in energy consumption and/or CO2 emission. Loans are approved for a maximum period of up to 7 years and a Page 4

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maximum amount of up to EUR 1 million for energy efficiency projects and up to EUR 3 million for renewable energy projects.

12) Trial agricultural census conducted June 4th, 2020, http://www.stips.minpolj.gov.rs/srl/vest/probni-popis-poljoprivrede-od-12-do-19-juna

As part of the preparations for the upcoming Census of Agriculture 2021, the state statistics office conducted a trial census between June 12 and June 19. The goal of the pilot was to test the overall methodology of the census as well as that of a specially-designed app for entering and sending data to a centralized location for processing.

The implementation of the Census of Agriculture 2021 is necessary to ensure continuity in the production of structural data in the field of agriculture. It is also in line with the World Agricultural Census 2020 Program of the Food and Agriculture Organization of the United Nations (FAO), which recommends that all countries conduct the census between 2016 and 2025 in accordance with specific guidelines.

Private Sector 13) Unused resources could be tapped for mushroom production June 18th, 2020, https://beta.rs/ekonomija/ekonomija-srbija/

The Minister of Regional Development announced that investing in mushroom production in Serbia could be a profitable business opportunity, especially as the country has unused resources that could be utilized in this direction. The Minister also noted that world markets, especially European ones, give the sector excellent export opportunities, especially if products are dehydrated for an extended shelf life.

Exports of mushrooms in recent years have been relatively strong and vastly outpace imports by nearly 75 times; however, most of the exports are collected from nature. It is important to note that some experts are more cautious than the Minister, citing that past success from mushrooms collected from nature does not necessarily predict performance from farms. At the same time, other experts believe that mushroom farming in Serbia could amount to profits of more than EUR 40 per square meter.

Those interested in investing in mushroom production are encouraged to form cooperatives and seek support under the state-run 500 Cooperatives in 500 Villages program, which has funds available for such projects as well as technical assistance available on forming/joining cooperatives and starting a successful mushroom production center.

14) Only one in five tractors are “new� in Serbia June 11th, 2020, http://www.stips.minpolj.gov.rs/srl/vest/u-srbiji-tek-svaki-peti-traktor-nov

There are currently approximately 400,000 tractors operating in Serbia, but only about one in five of those can be considered as new. Most of the newer tractors were purchased under the Ministry of Agriculture’s subsidy program and/or utilizing IPARD pre-accession funds. On average, most agricultural machinery currently in use in Serbia is more than 30 years old, a problem that has been prolonged due to state decisions (e.g. changes to the Law on Road Traffic Safety) that allow older machinery to remain legally operational. Experts claim that, without these changes, more than 60% of agricultural machinery would not pass technical inspections.

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15) 30% of raspberry crops destroyed by storms June 11th, 2020, http://rs.n1info.com/Biznis/a608920/Malinari-Nevreme-unistilo-30-odsto-ovogodisnjeg-roda.html

The president of the Association of Raspberry Producers of Serbia has announced that recent storms, which brought with them hail, high winds and heavy rainfall, have destroyed 30% of the raspberry harvest. This is an important development for raspberry producers, who finally saw prices increase to RSD 250 per kilogram from RSD 65-170 last year.

In general, raspberries are expected to be in much shorter supply this year in markets around the world as storms and diseases have halved production in the world’s largest raspberry-producing countries, Chile and Poland. Moreover, Serbian raspberry producers are struggling to attract an adequate labor force for harvesting activities.

16) Area sown with sugar beets up 25% June 5th, 2020, https://beta.rs/ekonomija/ekonomija-srbija/128374

Between 36,000 and 37,000 hectares were sown with sugar beet in March and April of this year, 25% more than last year. The majority of that (28,000 hectares) has already been contracted to be sold to Sunoko, which also organized Sugar Beet Field Days around the country to facilitate experience exchanges and knowledge sharing with sugar beet producers. At the events, Sunoko representatives conveyed the company’s support for sugar beet production and a collaborative working environment to overcome the challenges and specific circumstances sugar beet producers face.

Based on the sown area, experts are predicting that enough sugar can be produced this year to meet domestic demand and have reserves.

17) USD 650 million inflow projected from fruit exports this year June 3rd, 2020, http://rs.n1info.com/Biznis/a606251/Strucnjaci-ocekuju-650-miliona-dolara-priliva-od-izvoza-srpskog-voca.html

Experts are predicting that Serbia could realize a foreign exchange inflow of approximately USD 650 million from fruit exports this year, despite the fact that the overall yield is projected to be down by 5%.

In total, fruit exports this year are expected to be between 1.2 million and 1.3 million tons. Moreover, demand for fruit coupled with a reduced supply will help drive prices to potentially ten-year highs.

At the same time, it should be noted that fruit exports could be even higher if measures were taken to improve raspberry production, which generates the largest foreign exchange inflows for the country after wheat. Specifically, a 2006 virus hit raspberry plantations hard and resulted in the destruction of many raspberry plants, with little done to replace them.

18) Crop dusting by drones for the first time in Serbia June 2nd, 2020, http://www.rtv.rs/sr_ci/drustvo/nove-tehnologije-u-poljopivredi-zaprasivanje-pomocu-drona_1130901.html

On property belonging to the Agricultural School of Obrenovac, drones were used to complete crop dusting activities for the first time in Serbia. Following the coming harvest, the results of this type of treatment will be compared in terms of both quantity and quality against crops that received traditional, manual dusting.

The president of the Association for Unmanned Systems in the Economy explained that similar dronebased solutions can also be used for the early detection of crop health changes, including the Page 6

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appearance of diseases, as well as for more properly planning other agricultural activities. Experts and government officials hope that the use of such technology in this example will encourage Serbian agricultural producers to adopt more digital solutions.

19) EUR 29.75 million in organic exports in 2019 June 1st, 2020, https://www.danas.rs/ekonomija/izvoz-organskih-proizvoda-iz-srbije-skoro-30-miliona-evra-u-2019-godini-2/

More than 13,000 tons of organic products valued at EUR 29.75 million were exported from Serbia in 2019, the majority (EUR 28.7 million) of which was organic fruits and fruit products. This represents an increase of EUR 2.3 million over 2018.

Most organic products were exported to European Union (EU) markets, including Germany, the Netherlands, France, Italy, Poland, Austria and Belgium. Serbian organic products also reached U.S. markets. Frozen organic raspberries occupied first place in terms of quantity and value of exports, followed by organic apple concentrate, frozen blackberries and cherries.

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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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