#09 BFC Serbia Agriculture Finance Bulletin

06/2016

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9 Serbia Agriculture Finance Bulletin Green Paper 2015 Published Applications for EUR 175 Million EU Fund Pot Open in Autumn Green Economy Could Create 300,000 Jobs for Under 30s Cultivation Totals 1.6 Million Hectares in 2016

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Agriculture Finance Bulletin Edition #9, June 2016

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

Green Paper 2015 Published ........................................................................................................... 2 New Law being Drafted for Pesticide Usage by Farmers ................................................................ 2 Dairy Sector Expected to Remain Under Protection ....................................................................... 2 Decree Stipulating State-Owned Agricultural Land Lease Terms Adopted ..................................... 2 EUR 1.35 Million Food Safety IT Systems to be Implemented ........................................................ 3 Cattle Farmers Receive Preferential Leases on 9,000 Hectares of State-Owned Land ................... 3 Ministry of Agriculture Denies Russian Claims that 10% of Fruit and Vegetables Unsafe .............. 3

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

Applications for EUR 175 Million EU Fund Pot Open in Autumn .................................................... 3

Private Sector.............................................................................................................. 4 9) 10) 11) 12) 13) 14) 15)

Green Economy Could Create 300,000 Jobs for Under 30s ............................................................ 4 Serbian Seed Varieties Competitive Domestically and Globally ..................................................... 4 Serbian Beef to be Exported to China ............................................................................................. 5 Raspberry and Other Crops Damaged by Rain and Hail .................................................................. 5 Raspberry Producers Seek RSD 220 per kg – Current Price RSD 157 per kg ................................... 5 Cultivation Totals 1.6 Million Hectares in 2016............................................................................... 5 Sugar Beet Harvest Expected at 55,000 tons .................................................................................. 6

Note: The Agriculture Finance Bulletin presents a monthly roundup of headlines and news stories related to investments and financing flows 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.

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

Phone: +41 44 784 22 22 Fax: +41 44 784 23 23

info@bfconsulting.com www.bfconsulting.com

BFC Agriculture Finance Bulletin

State Initiatives 1)

Green Paper 2015 Published

June 30th, 2016, http://www.mpzzs.gov.rs/ministarstvo-poljoprivrede-i-zastite-zivotne-sredine-objavilo-zelenu-knjigu-2015/

The Ministry of Agriculture and Environmental Protection has published a report on the state of agriculture in the Republic of Serbia in 2015. The Green Paper 2015 analyzes the state of agricultural affairs for the 2015 calendar year and consists of two books: (1) a horizontal overview of the sector and (2) an overview of the most important sectors in Serbian agriculture.

This is the third year of publication for the Green Paper. Read More »

2)

New Law being Drafted for Pesticide Usage by Farmers

June 29th, 2016, http://www.021.rs/story/Info/Srbija/138888/Poljoprivrednici-ce-dobijati-pesticide-samo-uz-potvrdu-oobuci.html

A new law being drafted on plant protection products will mandate that farmers undergo certification in the use of pesticides prior to being able to purchase the products. The law is part of an overall effort to harmonize Serbian legislation with that of Europe. According to unofficial sources, about 70 percent of fruits and vegetables in the market are sprayed with pesticides, and farmers generally do not check the contents of the product they are using. This can be problematic due to the fact that sellers of pesticides sometimes offer products that are not quite suitable for what they are used for and may pose a risk for human health, animals and the environment.

3)

Dairy Sector Expected to Remain Under Protection

June 29th, 2016, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:612491-Mleko-i-dalje-pod-zastitom

The government of Serbia has not yet acted on a proposal from the Ministry of Agriculture regarding the tax on dairy product imports from Europe, although the current measures are expected to be extended beyond the expiration date of June 30 of this year. The state introduced the tax in order to protect domestic producers from an influx of low-cost European dairy products.

Dairy producers in Serbia are insistent that the measures remain; otherwise, they warn, it will mean the end of the dairy sector in Serbia. At the same time, the Serbian government is facing pressure from officials in Brussels to end the tax or face the potential of counter measures.

4)

Decree Stipulating State-Owned Agricultural Land Lease Terms Adopted

June 14th, 2016, http://www.tanjug.rs/full-view.aspx?izb=251768

A decree setting out the criteria required for obtaining priority tenure on state-owned agricultural land has been adopted, according to Minister of Agriculture Snezana Bogosavljevic Boskovic. The legislation pays heed to associations and cooperatives in particular, setting out clear conditions and procedures – notably for determining rent – said the Minister. Proposals will be evaluated according to their economic, environmental and technological impact, as well as jobs created. Minimum investment must be EUR 500,000 in total, or EUR 3,000 per hectare, said Boskovic. Candidates may lease a maximum of 30% of the municipality’s available land. Applications will be assessed by a five-member panel, with a simple majority required for approval. The decree was designed to protect small and large investors alike, while putting the interests of Serbia as a whole in the forefront, concluded the Minister.

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5)

EUR 1.35 Million Food Safety IT Systems to be Implemented

June 10th, 2016, http://www.mpzzs.gov.rs/predstavljen-projekat-unapredjenja-kontrole-hrane-od-njive-do-trpeze/

KPMG is to implement a EUR 1.35 million, EU-funded project to develop an integrated IT system for Serbia’s Ministry of Agriculture. The aim of project is to improve the management, control and communication of food safety. Completion is expected in 2017. The program will focus on the IT departments of the Veterinary Directorate, the Plant Protection Directorate and the Agricultural Inspection Directorate. A new data collection, analysis and dissemination system will be developed, improving risk management, localization and reporting.

The program will improve food safety in Serbia while aligning it with European Union (EU) standards. It is essentially Serbia’s adoption of the “farm to fork” principle, according to Danilo Golubovic, State Secretary at the Ministry of Agriculture.

6)

Cattle Farmers Receive Preferential Leases on 9,000 Hectares of StateOwned Land

June 9th, 2016, http://www.rtv.rs/sr_lat/vojvodina/sombor/so-da-li-ce-biti-licitacije-zemljista_726514.html

According to the new legislation on state-owned agricultural land, 200 hundred cattle farmers have obtained preferential leases on pastureland totaling 9,000 hectares at EUR 240-250 per hectare. The land is part of a total 17,500 hectares due for auction. The remaining area will be put up for lease once the contracts have been signed and payment received for the first allotment, expected in a month and a half, according to Slobodan Kosanovic, Head of the Vojvodina’s Agriculture Department.

7)

Ministry of Agriculture Denies Russian Claims that 10% of Fruit and Vegetables Unsafe

June 8th, 2016, http://www.tanjug.rs/full-view.aspx?izb=250653

Rosselkhoznadzor - Russia’s Federal Service for Veterinary and Phytosanitary Surveillance – claimed 10% of Serbian fruit and vegetables inspected were unsafe for consumption. The claims were denied by Serbia’s Head of Phytosanitary Inspection, Nenad Milojevic, who insisted that no consignment has been found to contain unsafe levels of pesticides or nitrates, nor have any products been returned. Serbia’s fruit and vegetables undergo random inspections domestically and are safe for consumption, said Milojevic, adding that 48-50 food safety inspectors were operating at customs.

Foreign Aid 8)

Applications for EUR 175 Million EU Fund Pot Open in Autumn

June 12th, 2016, http://www.rts.rs/page/stories/sr/story/13/ekonomija/2350082/evropsko-sito-za-srpske-poljoprivrednike--kursevi-obavezni.html http://balkans.aljazeera.net/vijesti/evropska-sredstva-nedostupna-poljoprivredi-srbije

The Ministry of Agriculture said it would receive applications to the European Union’s (EU) EUR 175 million Instrument for Pre-accession Assistance with Rural Development (IPARD) fund by early autumn.

The tranche will be disbursed over 6 years. Farmers investing from EUR 5,000 - 2,000,000 may receive a 50-70% reimbursement of expenditures. State-run agricultural programs may receive up to 90% of

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required funds. Candidates may request the assistance of an agency to complete the application process.

Applicants that are not agriculture school graduates and have not worked in the agriculture sector for at least 3 years must participate in training courses. The EU requires its farmers to attend training. While Serbian law requires the same, lack of funding renders the practice sporadic and voluntary. The Serbian Institute of Agricultural Economics’ Jonel Subic said the school will adopt the complete EU training package. The science and technologies involved should improve Serbian agriculture, said Subic.

However, an EU delegation recently visited Serbia to assess its readiness to implement the IPARD program and is yet to publish its conclusions, according to Aljazeera – a broadcaster.

Private Sector 9)

Green Economy Could Create 300,000 Jobs for Under 30s

June 27th, 2016, http://www.danas.rs/ekonomija.4.html?news_id=322546

In Serbia, the green economy could create 300,000 jobs for under 30s, claimed Sinisa Mitrovic, European Union (EU) and Environment Advisor to the Chamber of Commerce, during a speech at a green economy forum organized by the Friedrich Ebert Foundation and the International Labour Organisation. Energy efficiency would improve and costs decrease, she added, while addressing climate change. Mitrovic expressed satisfaction at young people’s growing interest in the topic, with “environmental analyst” ranking 3rd as a career choice amongst high school students.

The green economy should be on the curriculum in schools while trade unions should be involved in raising awareness of its importance, according to Zlata Zec, Executive Secretary of UGS Nezavisnost – a union. According to Branislav Bozic, editor of newspaper “Danas”, only EUR 2 million has been invested in the green economy thus far. The government should launch an awareness campaign and increase spending, said Bozic.

10) Serbian Seed Varieties Competitive Domestically and Globally June 26th, 2016, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:611962-Srpske-sorte-sade-Kinezi-iJapanci

While the share of domestic crops sown with Serbian seed varieties has decreased significantly, domestic seed types are competitive on the domestic and international market, according to agriculture analyst Milan Prostran. With the opening of borders, competition has been fierce, but Serbian seed copes well on the domestic market and has penetrated many foreign markets, faring well in even the most demanding market – the European Union, said Prostran.

Serbian wheat still holds a 60% share of the domestic wheat crop, according to Prostran. While foreign companies produce higher yield varieties, buyers are opting for Serbian varieties due to their superior quality, explained Dr. Srbislav Dencic of the Novi Sad Institute of Field and Vegetable Crops. The Institute estimates ⅛ of global oilseed is of a Serbian strain, compared to 15% planted domestically. Corn grown in Serbia is mostly hybrid, according to Goran Bekavac, also of the Institute. Via Ukraine and Russian, Serbian corn ends up in many international markets, including the EU and Iran – currently the largest buyer – said Bekavac.

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11) Serbian Beef to be Exported to China June 22nd, 2016, http://www.chinadaily.com.cn/food/2016-06/22/content_25808749.htm

Traveller 99 and Ebuscmec.1688.com have teamed up to export Serbian beef to China. Ebuscmec – affiliated to the China Machinery Engineering Corporation – provides high quality products to Chinese consumers while Traveller 99 specializes in marketing. The partnership was formed to satisfy high Chinese demand for quality beef at competitive prices.

12) Raspberry and Other Crops Damaged by Rain and Hail June 21st, 2016, http://www.rtv.rs/sr_lat/ekonomija/aktuelno/srbiji-je-potreban-raketni-stit-ali-protivgradni_730018.html

With a government commission estimating rain and hail damage over the weekend in the millions of euros, Unity – an agricultural trade union – said it demonstrates the current anti-hail system is inefficient and further neglect will only prove more expensive in the future. The storms began on Sunday, with Pancevo and Kosjeric experiencing the most significant damage.

Milijan Stojanic, Mayor of Kosjeric, said much, but not all, of the raspberry crop has been destroyed, with orchards and other crops also badly affected. Roads must be repaired as quickly as possible, so that farmers can attend to their crops. While all available machinery is being deployed, Kosjeric has asked the government to send trucks to build levees. A team from the Ministry of Agriculture will visit over the coming days, said the Mayor.

13) Raspberry Producers Seek RSD 220 per kg – Current Price RSD 157 per kg June 16th, 2016, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:610549-Malinari-za-kilogram-traze-220dinara

The Association of Serbian Raspberry growers is dissatisfied with the current low price of raspberries – cold storage enterprises are currently purchasing at RSD 157 per kilogram. The Association suggests RSD 283 per kg (EUR 2.30) and are considering whether to launch protests. Production costs – including fertilizer, and picker’s fees – cannot be covered by the current price, according to the Association. It is rumored that, unofficially, producers are requesting RSD 220 per kilogram. This year, an estimated 15,000 hectares of raspberry will be harvested, down 10%-40%, depending on the region.

Meanwhile, cherry growers in Zitorada have launched protests in response to low purchasing prices.

14) Cultivation Totals 1.6 Million Hectares in 2016 June 13th, 2016, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:609972-Polovinu-novog-zita-prodacemopo-svetu http://www.tanjug.rs/full-view.aspx?izb=250576

This year, 1.6 million hectares of crops were sown. The wheat harvest is estimated at 610,000 hectares yielding 3 million tons. About 1.5 million tons will go to the domestic market and the rest will be sold internationally. Current wheat prices are RSD 15-16 per kilogram. In 2015, wheat exports totaled 492,843 tons, with imports at 1,287 tons. In 2016, with stores of last year’s harvest included, barley exports are expected at 1.6-1.8 million tons. Of the total, 600,000 tons will be exported to countries in the region. In 2015, figures stood at 54,450 tons exported and 3,332 tons imported. Last year, 266 tons of rye were exported with 354 tons imported. Bread consumption fell from 101.5 kilograms per capita per annum in 2006 to 83.71 kg per capita per annum in 2015.

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About 220,000 hectares of sunflower and 200,000 hectares of soy were sown this year. In 2015, soy exports totaled 134,814 tons, while 98,101 tons were imported. At an estimated 1 million hectares, corn is by far the most sown crop. Serbia is also one of the world’s largest corn exporters, shipping 2,190,716 tons in 2015, while 7,381 tons was imported. In 2015, 80,000 tons of beef was produced. Per capita consumption fell to 38 kilograms per capita per annum compared to 65 kilograms per capita per annum in 1990.

In 2015, agricultural exports totaled USD 2.8 billion with imports totaling USD 1.5 billion, representing a USD 1.3 billion surplus.

15) Sugar Beet Harvest Expected at 55,000 tons June 1st, 2016, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:608124-Bice-dovoljno-srpskog-secera

This year, sugar beet was sown across 55,000 hectares with an estimated harvest of 2.5 million tons, projected to meet both domestic demand and provide surplus for export, according to Ljubisa Radenkovic, General Director of Sunoko,.

About 350,000 tons of sugar will be produced at Serbia’s four plants: Pecinci, Vrbas, Kovacica, and Senti, said Ljubisa. The abolition of European Union (EU) quotas in October 2017 will provide a challenge, however, said Ljubisa. The industry must respond by increasing yields, he concluded.

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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.

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