#16 Serbia Agriculture Bulletin, BFC

01/2017

#

16 S e r b i a Agriculture Bulletin Russia agrees increase in Serbian meat imports

China to invest in Serbian agriculture

EU food safety project completed

Wheat cultivation decreases by 18%

All materials are published “as is� and are the property of their respective owners.

Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11)

Subsidy process announced for agricultural machinery ................................................................. 2 Strengthening cooperation with farmers ........................................................................................ 2 Additional bird flu cases confirmed ................................................................................................. 2 New fruit production program for underdeveloped areas ............................................................. 3 Mass foreign land purchases to be banned .................................................................................... 3 New subsidy schemes to launch mid‐February ............................................................................... 3 Russia agrees increase in Serbian meat imports ............................................................................. 3 China to invest in Serbian agriculture ............................................................................................. 4 Pension law to be amended ............................................................................................................ 4 Agriculture budget receives RSD 3.32 billion boost ........................................................................ 4 Irrigation system covering 22,000 hectares announced ................................................................. 4

Foreign Aid ................................................................................................................. 5 12) Precision agriculture pilot program to launch ................................................................................. 5 13) EU food safety project completed ................................................................................................... 5

Private Sector .............................................................................................................. 5 14) 15) 16) 17)

Honey exports total EUR 8.3 million ............................................................................................... 5 Wheat cultivation decreases by 18%............................................................................................... 6 Milk import duty abolition causing concern .................................................................................... 6 High yields attributed to know‐how and technology ...................................................................... 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

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

info@bfconsulting.com www.bfconsulting.com

BFC Agriculture Bulletin

State Initiatives 1)

Subsidy process announced for agricultural machinery

January 29th, 2017, http://www.rtv.rs/sr_lat/ekonomija/aktuelno/subvencije‐za‐poljoprivrednu‐mehanizaciju_795704.html

Agriculture Minister Branislav Nedimovic announced that farmers would be provided subsidies for agricultural machinery through a regulated procedure in accordance with the Law on Agriculture. This year, when an invoice is submitted, a decision will be made on whether or not to approve the subsidy within the next 90 to 120 days. Last year, there were issues with farmer applying for subsidies repeatedly and never knowing if the subsidy would be made available to them as it was contingent on funds being available at the time of application.

Minister Nedimovic also announced that the Ministry is currently working to resolve issues related to disability insurance for farmers and has arranged with the tax authority to stop forced collection efforts against disability insurance as a way of collecting old debts.

This year, the budget for agriculture increased an additional 50% over the amount budgeted for last year. The Ministry plans on adopting measures that will help the sector strengthen animal husbandry and crop farming as well as provide measures for start‐up loans and anti‐hail nets.

2)

Strengthening cooperation with farmers

January 29th, 2017, http://www.mpzzs.gov.rs/nedimovic‐jacanje‐saradnje‐sa‐poljoprivrednim‐proizvodjacima‐i‐njihovim‐ udruzenjima‐uskoro‐bez‐prepreka‐za‐ipard/

Agriculture Minister Branislav Nedimovic announced that his Ministry is focused on strengthening cooperation and the direct exchange of information with farmers and farmer associations in order to maximize the positive effects of agricultural policies. To this end, the Ministry has conducted 13 training seminars for farmers and has also undertaken efforts to remove the roadblocks affecting the use of IPARD funds. It is expected that external auditors will arrive in April to ensure that all the necessary conditions have been met for the first call for applications for the procurement of agricultural machinery (e.g. tractors, processing equipment, etc.) to occur at some point this summer.

Minister Nedimovic also announced that the Ministry is examining the possibility of leasing agricultural lands for longer periods of time — up to 30 years in some instances.

3)

Additional bird flu cases confirmed

January 26th, 2017, http://www.danas.rs/drustvo.55.html?news_id=337255

Following six confirmed cases of avian influenza – or bird flu – in December, 2016, the Veterinary Inspectorate has confirmed a further outbreak in Zrenjanin and in areas surrounding Botos. Once again, the infected animals were wild swans. The Ministry of Agriculture declared a 3 km protection and 10 km surveillance zone radiating the hotspots. A census and monitoring of wild animals, livestock and farm traffic will occur within the zones, while farmers have been advised to keep livestock indoors and under close scrutiny, said the Ministry. Should an alternation in animal health be observed, farmers are requested to contact the Veterinary Inspectorate. The December outbreak occurred near Ludosko lake in Subotica and in the city of Novi Sad.

Page 2

BFC Agriculture Bulletin

4)

New fruit production program for underdeveloped areas

January 26th, 2017, http://www.4‐traders.com/news/Narodna‐Skupstina‐Republike‐Srbije

The Subcommittee for Agriculture in Marginal and Underdeveloped Areas agreed a raft of measures to encourage fruit farming including: higher production and land leasing subsidies; facilitating well‐digging on state‐owned land; expanding cold storage capacity; and expanding hail‐net and irrigation systems.

The project aims to introduce 18 types of fruit cultivation across 170,000 ha with the technical assistance of Serbia’s agricultural faculties and institutes, said State Secretary of Agriculture Velimir Stanojevic. At 1.5 million tons annually, fruit production makes up only 20% of exports, added the Secretary, making it a development priority. The project is similar to the viniculture program introduced in 2013, said Stanojevic.

Fruit crops and vineyards currently cover 240,000 ha and 50,000 ha respectively, according to Subcommittee Chair Milija Miletic. In 2016, fruit exports totaled USD 473 million, added Miletic.

Problems affecting fruit cultivation include aging trees, lack of quality seed, and insufficient weather protection. Hopefully the measures will encourage small farmers in underdeveloped areas to cultivate fruits, concluded Miletic.

5)

Mass foreign land purchases to be banned

January 26th, 2017, http://www.agronews.rs/nedimovic‐menjamo‐zakon‐o‐zemljistu/

A provision of the Stabilization and Association Agreement of Serbia with the European Union that allows foreigners to buy agricultural land will come into effect for 8 months. Minister of Agriculture Branislav Nedimovic said he would propose an amendment to the law that would prevent the massive acquisition of agricultural land by foreign entities. The European Commission has been notified and agreed in principle to potential amendments; details cannot be given while negotiations proceed, said Nedimovic.

6)

New subsidy schemes to launch mid‐February

January 24th, 2017, http://www.stips.minpolj.gov.rs/sadrzajv/nedimovi%C4%87‐u‐februaru‐konkursi‐za‐subvencije

Farmers will be invited to tender for subsidies come mid‐February, said Minister of Agriculture Branislav Nedimovic. There are four subsidy categories: orchard and vineyard tractor procurement; young farmer incentives; processing capacity improvement; and storage, drying, and freezing facility construction. This year, subsidies will come as rebates on existing investments. The subsidy will be disbursed only once the investment has been approved – usually 60‐90 days after receiving an application, said Nedimovic. This allows better control over how government money is spent, discouraging fraud, added the Minister.

In addition to subsidies, Serbia needs better hail protection, said Nedimovic, including an additional 10,000‐14,000 anti‐hail rockets, but also widespread insurance coverage.

7)

Russia agrees increase in Serbian meat imports

January 17th, 2017, http://www.mpzzs.gov.rs/ministar‐nedimovic‐dogovoreni‐dalji‐koraci‐u‐cilju‐povecanja‐izvoza‐u‐rusiju/

Minister of Agriculture Branislav Nedimović met with Russian Ambassador Alexander Chepurin to discuss increasing trade in agriculture. Chepurin agreed to allow Serbian meat producers to increase exports to Russia, including beef and pork, raw and processed goods. The parties also agreed to set up a dedicated team to monitor agricultural trade.

Page 3

BFC Agriculture Bulletin

8)

China to invest in Serbian agriculture

January 16th, 2017, http://www.mpzzs.gov.rs/srbija‐i‐kina‐potpisuju‐memorandum‐o‐saradnji‐u‐oblasti‐poljoprivrede/

Serbian and Chinese Ministers of Agriculture Branislav Nedimovic and Han Changfu met in Belgrade.

Following discussions, a memorandum of understanding was signed which foresees Chinese investment in the Serbian agriculture sector – particularly the meat, fruit, and vegetable processing industries. China welcomes safe and quality Serbian products, which improve consumer choice in China while also benefiting Serbian farmers. Chinese Minister, Han Changfu encouraged Serbia to increase cooperation through the “One Belt, One Road” and “16+1” initiatives, the latter comprising the 16 Eastern European and Central Asian countries.

9)

Pension law to be amended

January 8th, 2017, http://www.b92.net/biz/vesti/agro‐biz.php?yyyy=2017&mm=01&dd=08&nav_id=1218061

The government hopes to introduce an income‐based pension contribution system instead of the current flat rate, said Minister of Agriculture Branislav Nedimovic. The amendment is to help alleviate escalating farmer contribution debts. Agricultural pension debt currently stands at RSD 90.8 billion. Of the 250,000 farmers registered to the pension fund, only 34,000 make regular contributions.

Under the current law, indebted farmers are in danger of having their assets confiscated, warned Nedimovic. Both small‐scale and large‐scale farmers are required to pay the same rates, and this is hardly fair, observed the Minister. In 2014, an amendment stipulated that, going forward, only one member of a farming household would be required to pay contributions. This did little to help, however, as poorer farmers were still unable to meet contributions. Once retired, many farmers face the prospect of paying more in interest on their debts than they receive as pension. The flat rate currently stands at RSD 96,000.

10) Agriculture budget receives RSD 3.32 billion boost January 5th, 2017, http://www.dnevnik.rs/ekonomija/za‐telad‐5000‐dinara‐za‐junad‐10000

This year, the agriculture budget is up RSD 3.32 billion, while agriculture investment subsidies quadrupled to RSD 2.2 billion from RSD 536 million. Cattle farmers will benefit from increased subsidization. Beneficiaries will receive RSD 20,000 per dairy cow and RSD 10,000 per beef cattle, up from RSD 5,000 in 2016. Farmers must own each beef cattle for a minimum 185 days to receive the subsidy. Beneficiaries may not receive both the dairy cow and beef cattle subsidies. Young farmers may apply for start‐up grants and benefit from subsidized loans, regardless of production‐type. Areas devastated by flooding – including Bela Palanka, Targovishte, and Svrljig, Babusnica – will receive more aid.

11) Irrigation system covering 22,000 hectares announced January 2nd, 2017, http://www.b92.net/biz/vesti/agro‐biz.php?yyyy=2017&mm=01&dd=02&nav_id=1216384

The Ministry of Agriculture announced tender for 14 irrigation system projects, to be funded by an Abu Dhabi Fund for Development (ADFD) loan. The project will irrigate 22,000 hectares of new land over 11 locations in Vojvodina, and also in Sabac and surrounding areas in Macva, according to Minister of Agriculture Branislav Nedimovic. Irrigation should increase fruit crop yields from 20‐35 tons per hectare to 60‐80 tons per hectare, said the Minister.

Page 4

BFC Agriculture Bulletin

Foreign Aid 12) Precision agriculture pilot program to launch January 27th, 2017, http://www.agronews.rs/projekat‐apollo‐satelitski‐snimci‐u‐sluzbi‐poljoprivrede/

A pilot of the Apollo satellite‐based precision agriculture program will begin in Rumi in April. Launched in May, 2016, with the assistance of the European Union (EU) Horizon 2020 research fund, Apollo uses the EU’s Copernicus satellite system to provide precision advisory services. Plow scheduling, based on soil moisture, allows optimal timing while also signaling where plowing will be ineffective; for example, where mud is present. Precision irrigation scheduling allows farmers to determine exactly when to activate systems and to what degree, preventing over and under watering. Crop condition monitoring provides data on pest levels and plant nutrition, allowing optimal fertilizer and pesticide application.

Accurate yield forecasts can be given a month prior to harvest, while weather forecasts will be given throughout the year.

Data can be accessed via computer or mobile phone. Apollo’s Serbian partners include the OSGL Laboratory at the Faculty of Civil Engineering in Belgrade and the Rumi Farmers Association. The project should reduce costs, while increasing profits and competitiveness on the European market, said OSGL’s Dragutin Protic. The project coordinator is Greece’s DRAXIS Environmental. The pilot will last 34 months, after which it will be available throughout Serbia.

13) EU food safety project completed January 27th, 2017, http://www.stips.minpolj.gov.rs/sadrzajv/srbija‐di%C5%BEe‐standarde‐za‐bezbednost‐hrane

A European Union (EU) funded, EUR 2 million food safety project was recently completed in Serbia. The three‐year project, implemented by the Netherlands, Denmark and Latvia, provided training in food safety procedures as well as animal byproduct management to help prevent the outbreak and spread of diseases. In total, 155 veterinary inspectors and 38 byproduct managers took part. The project is part of a broader EUR 28 million EU effort to improve food safety and veterinary policy in Serbia.

The EU also supported the development of the Serbian National Strategy for the improvement of animal product facilities. To join the EU, Serbia must meet its food safety standards, which is not an easy task, said Deputy Head of Serbia’s EU Delegation Oskar Benedikt. The EU implements a number of projects in Serbia, including rabies control, which will help unlock EU Instrument for Pre‐accession Assistance in Rural Development (IPARD) funding, added Benedikt. Despite its small size, the Netherlands exported EUR 84 billion worth of agricultural products in 2016 – second only to the US, said Netherlands Ambassador Hendrik van den Dol.

Private Sector 14) Honey exports total EUR 8.3 million January 25th, 2017, http://www.stips.minpolj.gov.rs/sadrzajv/od‐izvoza‐meda‐83‐miliona‐evra

In 2016, honey exports totaled 2,145 tons worth EUR 8.3 million. Though Serbia’s 15,000 beekeepers own roughly 970,000 hives, honey production was minimal. This was due to problems affecting the sunflower crop. Last year’s exports came almost entirely from 2015 reserves, said President of the Beekeeping Association of Serbia Rodoljub Zivadinovic. Forecasts for 2017 are not yet possible, said Zivadinovic, as it depends on the sunflower crop and on how winter conditions affect bee numbers.

Page 5

BFC Agriculture Bulletin

15) Wheat cultivation decreases by 18% January 17th, 2017, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:645075‐U‐Srbiji‐posejano‐manje‐ psenice‐nego‐2015‐useve‐ugrozava‐hladnoca

Last year, wheat was sown across 500,000 hectares, an 18% decrease year‐on‐year, according to Serbian Chamber of Commerce Director Zarko Galetin. Half was sown beyond the optimal deadline of November 10. Beyond this date, observed Geltin, wheat is less resistant to the cold. Compounding this problem, farmers in Vojvodina have planted new wheat varieties that are less resistant to the cold, worries Srbislava Dencic of the Novi Sad Institute of Field and Vegetable Crops. Wheat sown in 2016 covered the smallest area in half a century, according to Branislav Gulan of the Serbian Academy of Arts and Sciences. Together with reserves, however, wheat stocks will total an estimated 1.55 million tons, said Gulan, enough to cover domestic demand but leaving little for export.

In 2016, global wheat output totaled 751.26 million tons, up 6.54 million tons year‐on‐year, according to the Unites States Department of Agriculture (USDA). This is the fourth consecutive year of record yields.

Global demand is estimated at 739.77 million tons annually, while global wheat reserves stand at 252.14 million tons.

16) Milk import duty abolition causing concern January 16th, 2017, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:644880‐Stocari‐strahuju‐za‐cenu‐ mleka

There are concerns that the recent abolition of milk import duties on December 29 will adversely affect small dairies – particularly those with less than a dozen cows, said President of the Farmers Association of Vojvodina Miroslav Kis. These make up 70% of all dairies; because they are unable to produce at the same quality standards as larger dairies, they are offered lower prices, argued Kis. While it is too early to judge what affect the levy abolition will have, farmers are worried they may receive no further assistance in case of problems, said Kis.

European Union (EU) milk prices have been increasing, now coming in at EUR 0.30 per liter, reports Serbian Association of Milk Producers President Ljubisa Jovanovic. While milk prices should be above EUR 0.33 per liter for domestic production to remain competitive, the trend means there is not yet reason to worry, added Jovanovic. Minister of Agriculture Branislav Nedimovic made clear that, should EU milk prices threaten domestic dairies once again, import levies will be reintroduced. The levy – ranging from RSD 10‐20 per liter – was introduced following a Russian embargo on EU agricultural products that resulted in a glut of cheap milk.

17) High yields attributed to know‐how and technology January 12th, 2017, http://www.danas.rs/ekonomija.4.html?news_id=336102&title=+Najvi%C5%A1e+od+Boga%2c+manje+od+dr%C5%BEave%2c+ a+ni%C5%A1ta+od+EU

The record crop yields in 2016 were due to an increase in modern techniques and technologies, according to Zorica Rajacic, agricultural services advisor in Zrenjanin, and Goran Bekavac of the Novi Sad Institute of Field and Vegetable Crops (IFVC). The highest yields were at farms that deployed appropriate technologies and showed best practice with regards to sowing schedules and fertilizer quantities, said Rajacic. Particular care was needed due to a 40% increase in rainfall, which boosted weed growth, insect numbers and the spread of disease. Producers that employed comprehensive expertise saw yields of up to 15 t/ha for maize, 10 t/ha for wheat, and 100 t/ha for sugar beet, reported Rajacic.

Page 6

BFC Agriculture Bulletin

Despite the IFVC’s advice on how to maximize output, farmers are still making mistakes, said Bekavic.

Autumn soil analyses are often not carried out, leading to reduced yields. In 2016, for example, poor nitrogen levels led to a wide range of yields amongst farmers, said Bekavic. To increase revenues, farmers should form cooperatives, according to Professor Miladin Sevarlic of the Parliamentary Agriculture Committee. Cooperatives facilitate and lower the cost of machinery and equipment purchases while standardizing production, said Sevralic. Farmers should switch to organic production, advised the Professor, as it has shown success both on the domestic and international markets.

Page 7

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.

Copyright of articles is retained by their authors.