#18 Serbia Agriculture Bulletin, BFC

03/2017

#

18 S e r b i a Agriculture Bulletin RSD 590 million allocated for anti-hail nets

Incentive scheme for young farmers launched UN and EBRD to analyze grain and oilseed sector Serbia to export meat to China

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

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

RSD 590 million allocated for anti-hail nets .................................................................................... 2 Incentive scheme for young farmers launched ............................................................................... 2 Processing subsidies to increase ..................................................................................................... 2 Dairy cow breeding subsidies increase............................................................................................ 2 EC evaluates smart crop analysis program ...................................................................................... 3 MoA announces initiatives .............................................................................................................. 3

Foreign Aid ................................................................................................................. 3 7) 8) 9) 10)

UN and EBRD to analyze grain and oilseed sector .......................................................................... 3 New financing opportunities for processing sector ........................................................................ 4 EBRD to launch SME agri-credit program ........................................................................................ 4 UAE to fund irrigation systems ........................................................................................................ 4

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

Only 20% of winter crops planted at the optimum time ................................................................ 4 Serbian company to cultivate famous apple variety ....................................................................... 5 Serbia to export meat to China ....................................................................................................... 5 Al Dahra to increase presence to 20,000 hectares.......................................................................... 5 Long-term lease applications close ................................................................................................. 5 Nedimovic: raspberry imports not threatening .............................................................................. 6 Novi Sad to build agricultural IT center ........................................................................................... 6 Agricultural exports total USD 3.2 billion ........................................................................................ 6 Organic exports at EUR 19.6 million ................................................................................................ 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 »

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)

RSD 590 million allocated for anti-hail nets

March 31st, 2017, http://www.stips.minpolj.gov.rs/sadrzajv/bespovratna-sredstva-za-protivgradne-mre%C5%BEe

The government has allocated RSD 590 million in funding for anti-hail nets in 2017, an RSD 320 million increase over the amount allocated in 2016. 28 contracts worth RSD 76 million have already been signed with farmers, which will be enough to provide anti-hail nets to cover 70 hectares of fruit plantations.

Farmers were selected to receive the funds based on an earlier application process.

2)

Incentive scheme for young farmers launched

March 27th, 2017, http://uap.gov.rs/vesti/vesti-2017/pravilnik-o-podsticajima-programima-za-diversifikaciju-dohotka-iunapredjenje-kvaliteta-zivota-u-ruralnim-podrucjima-kroz-podrsku-mladim-poljoprivrednicima/

The Ministry of Agriculture (MoA) has launched an incentive scheme for young farmers aged 18-40 years. Successful applicants will be reimbursed a percentage of their investments toward crop and livestock production, or milk, vegetable and fruit processing. The incentive ceiling is fixed at RSD 1.2 million. A maximum of one application can be made per calendar year. Applicants engaged in underdeveloped or challenging sectors, operating a profitable business, holding agricultural education, or providing value-added products will be prioritized. Prospective beneficiaries must provide comprehensive investment documentation. Competition details can be found on the MoA website.

3)

Processing subsidies to increase

March 24th, 2017, http://www.ekapija.com/website/sr/page/1708978/Vu%C4%8Di%C4%87-najavio-ve%C4%87e-subvencijeza-proizvodnju-vo%C4%87a-povr%C4%87a-i-mesa

Higher subsidies for fruit, vegetable and meat production will be introduced, announced Prime Minister Aleksandar Vucic. Fruit and vegetable processing will see the largest increases. The production of compotes, jams and brandies should be encouraged before apples, apricots and plums are exported, said Vucic. The Prime Minister also announced a five-fold increase in agricultural machinery, and irrigation and anti-hail system subsidies.

4)

Dairy cow breeding subsidies increase

March 23rd, 2017, http://www.stips.minpolj.gov.rs/sadrzajv/pare-od-dr%C5%BEave-%C4%87e-dobiti-i-oni-sa-preko-300mle%C4%8Dnih-krava

Going forward, dairy cow breeding subsidies will total RSD 25,000 per head and benefit from a budget of RSD 5.2 billion, according to new legislation. The subsidies will be available to Serbian citizens holding a commercial family farm breeding 2-300 dairy cows. The legislation provides a ceiling exemption for 2017, however, rendering farms breeding over 300 dairy cows eligible.

Page 2

BFC Agriculture Bulletin

5)

EC evaluates smart crop analysis program

March 19th, 2017, http://www.politika.rs/sr/clanak/376456/Zemljoradnik-s-vestackom-inteligencijom

The European Commission (EC) is currently evaluating a EUR 3 million grant application from the developers of a “smart” crop analysis system created through a consortium of Serbian, German, French and Spanish institutions and private companies. The system provides comprehensive, real-time crop data and precision farming solutions, according to Dr. Zoran Stamenkovic of participating institution IHP Microelectronics institute.

Users are able to access a broad range of sensor-based information regarding phenology, epidemiology, weather, soil composition and moisture, and other factors, said Stamenkovic. The data is then interpreted by powerful processors producing acute recommendations on fertilization, pesticide use, irrigation, and other relevant parameters, added Stamenkovic. Project participants include: the Institute of Field and Vegetable Crops (Serbia); the Leibniz Institute for Agricultural Engineering and Bioeconomy (Germany); the INRA Toulouse (France); the University of Cantabria (Spain); and drone producer Smart Rural (Spain).

6)

MoA announces initiatives

March 12th, 2017, http://www.rtv.rs/sr_ci/ekonomija/aktuelno/nedimovic-nece-biti-prodaje-zemlje-strancima_807308.html

The Ministry of Agriculture (MoA) announced several initiatives going forward. First, contrary to the provisions of the 2008 Stabilisation and Association Agreements, the Serbian land market will not be fully liberalized. Just as in Hungary, Slovenia and Slovakia, the sale of land to foreigners will be restricted until at least September 1, said Minister of Agriculture Branislav Nedimovic. Second, raspberry growers and cold storage operators will be invited to Belgrade to develop a common strategy together Ministry of Agriculture and the Ministry of Trade. With the introduction of an upper subsidy limit, progress has been made in protecting small and medium producers, said the Minister. Third, a diesel subsidy will be introduced to combat rising prices. Using a payment card system, the subsidy will be available to those involved in all types of agriculture, assured Nedimovic. Finally, in May, an agreement will be signed paving the way for meat exports to China. Three Serbian facilities have been certified for the export of beef and lamb, while six Chinese processors are interested in importing Serbian products. The MoA plans to increase livestock production and expand the range of products exported to China, reported Nedimovic

Foreign Aid 7)

UN and EBRD to analyze grain and oilseed sector

March 19th, 2017, http://www.agronews.rs/potpisan-sporazum-o-saradnji-un-fao-i-zita-srbije/

The Cereals Serbia Association, the European Bank for Reconstruction and Development (EBRD), and the Food and Agriculture Organization (FAO) will conduct a Serbian grain and oilseed sector analysis addressing production and export challenges, according to EBRD-FAO Serbia Project Coordinator Milos Milovanovic. The study will address a range of topics, said Milovanovic, including grain quality, market demands, infrastructure, logistics, and river transportation network optimization, while providing the opportunity for dialogue between key representatives of the private and public sectors. The project should open new markets, stressed Cereals Serbia Association Director Vukosav Sakovic, including the largest: China, Egypt and Indonesia. Grain and oilseed make up 50% of Serbia’s agricultural production and their exports heavily contribute to the reduction in Serbia’s trade deficit, reported Milovanovic.

Page 3

BFC Agriculture Bulletin

8)

New financing opportunities for processing sector

March 14th, 2017, http://www.mpzzs.gov.rs/jaca-podrska-investicijama-u-preradjivacku-industriju/

The World Bank’s Multilateral Investment Guarantee Agency (MIGA) has agreed to assist with the development of new financing opportunities for the processing sector in Serbia, announced Minister of Agriculture Branislav Nedimovic. The Ministry of Agriculture (MoA) and MIGA agree the agriculture sector can only grow through the development of the processing industry, strengthening the presence of Serbian value-added products on the domestic and international markets, said Nedimovic.

9)

EBRD to launch SME agri-credit program

March 11th, 2017, http://www.tanjug.rs/full-view.aspx?izb=314110

The European Bank for Reconstruction and Development (EBRD) will launch a new preferential agricultural credit program for small and medium enterprises (SMEs) in cooperation with the Ministry of agriculture, said EBRD Regional Head of Agribusiness in central and south-eastern Europe Miljan Zdrale.

The Bank will use a program developed in Albania as a model, added Zdrale.

10) UAE to fund irrigation systems March 4th, 2017, http://www.rtv.rs/sr_ci/ekonomija/uae-finansiraju-navodnjavanje_805175.html

The United Arab Emirates (UAE) is to provide EUR 30 million in loans for the financing of 14 irrigation projects across Serbia, announced the Ministry of Agriculture. In a bid to offset the impact of drought, the program aims to reduce unirrigated arable land to below 2%.

Private Sector 11) Only 20% of winter crops planted at the optimum time March 28th, 2017, http://www.danas.rs/ekonomija.4.html?news_id=342142&title=Samo+20+odsto+oranica+zasejano+u+optimalnom+roku

Experts advising on proper winter crop conditions have estimated that only 20% of the area planted this year was planted at the optimum time for a maximum yield. They warn that late sowing dates, a cold winter and temperatures jumping from cold to warm and back to low could have an impact on total production, although the extent of this will remain unknown until the harvest.

Experts have advised farmers who planted early to give their crops fertilizers now as earlier sown crops will have spent most of the nitrogen they need. Farmers who planted later need to wait until their crops take root before feeding them with fertilizer. Experts are also cautioning farmers to protect wheat crops against disease, especially in the Backa region where the presence of gray leaf spot has been registered.

As for spring planting, experts say that winter rains have ensured a sufficiently moist surface layer and the time to plant spring crops is now. This will ensure that autumn harvests will be the maximum possible.

Page 4

BFC Agriculture Bulletin

12) Serbian company to cultivate famous apple variety March 27th, 2017, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:657205-Jabuka-crvena-ali--iznutra

Serbian-based company Delta Agrar has received the famous red moon apple for cultivation. The apple variety was created in France through twenty years of cross-breeding and is considered among the most desirable varieties due to its red skin and extremely flavorful red meat. It is currently grown in France, Italy and, now Serbia. The apple is harvested in September and October but also stores well over long periods of time, meaning that the fruit will be available year-round.

Delta Agrar plans on making the apple available in Serbia and throughout southeastern Europe and Russia and is exploring options for the cultivation of other varieties of apples, including the “snack-size” Isaac apple, Ruben apples and the Pink Lady apple.

13) Serbia to export meat to China March 24th, 2017, http://www.danas.rs/ekonomija.4.html?news_id=341937&title=Nedimovi%C4%87%3a+Sto%C4%8Darska+proizvodnja+raste

In April, an agreement will be signed with the Chinese Food and Drug Administration (CFDA) paving the way for the export of beef and lamb, announced Minister of Agriculture Branislav Nedimovic. Currently, three large producers – Djurdjevc, Neoplanta, and Juhor – have the necessary certificates for exports to China. While production is currently too low for large exports, the agreement will be an impetus for growth, argued Djurdjevic Director Djordje Kuzmanac. The three-year contracts will provide Serbian producers the opportunity to meet Chinese customer needs, leading to longer-term contracts and product diversification, with perhaps the inclusion of pork, said Kuzmanac. The arrival of German meat giant Tonnies should help increase production and provide valuable genetic resources, according to Nedimovic. Another positive development is the recent increase in pork prices from RSD 110-120 to RSD 145-150, added the Minister.

14) Al Dahra to increase presence to 20,000 hectares March 20th, 2017, http://www.b92.net/eng/news/business.php?yyyy=2017&mm=03&dd=20&nav_id=100810

Al Dahra – a United Arab Emirates (UAE) food and feed producer – plans to spend several million dollars increasing its stake in Serbian arable land from 1,000 to 20,000 hectares, according to Managing Director Khadim Al Darei. This year, the Al Dahra’s global land acquisition budget totals USD 130 million, reported Al Darei. The announcements were made at the World Forum for Innovations in Agriculture, gathering 300 companies from across the globe.

15) Long-term lease applications close March 16th, 2017, http://www.politika.rs/scc/clanak/376269/Za-drzavne-oranice-konkurisalo-150-investitora

More than 150 applications were made for 30-year leases of state-owned arable land, according to Politika sources. The application deadline was March 15. While the tender was open to all entities on the agricultural register, the biggest players, specifically those interested in increasing manufacturing capacity, were directly called to apply, understands Politika. These include German meat giant Tonnies and Delta Agrar. Prospective tenants are required to invest at least EUR 500,000 in processing capacity within the first three years and 30% their total investment commitment within the first year – though this applies only to plots over 1,000 hectares. Priority will be given to investment plans that create jobs and employ domestic suppliers.

Page 5

BFC Agriculture Bulletin

16) Nedimovic: raspberry imports not threatening March 13th, 2017, http://www.danas.rs/ekonomija.4.html?news_id=340959&title=Nedimovi%C4%87%3a+Uvoz+maline+ne+uni%C5%A1tava+dom a%C4%87u+proizvodnju+

Minister of Agriculture Branislav Nedimovic has denied that raspberry imports are damaging the domestic industry. The quality of Serbian raspberry is currently significantly superior to competitors’, said Nedimovic, pointing out that, in the past two months, Serbia exported 12,000 tons while importing only 1,000 tons, of which 600 tons came from Bosnia and Herzegovina. Nedimovic invited producers, cold storage operators, and procurers to join a permanent strategy group together with the Ministry of Agriculture. Producers should obtain geographical indications, which will strengthen Serbian brands and increase competitiveness, assured the Minister, citing the example of Sjenica cheese.

17) Novi Sad to build agricultural IT center March 11th, 2017, http://www.novosti.rs/vesti/srbija.73.html:654303-Senzori-dizu-prinose

The Novi Sad Biosense Institute has received a EUR 14 million EU Horizon 2020 award for its “Antares” agricultural information technology center, comprising several state-of-the-art laboratories. About EUR 4.5 million will be used for construction while another EUR 9.5 million will be used for the purchase of scientific equipment, according to Antares Coordinator Dr. Vesna Crnojevic-Bengin. An additional 150 researchers will be employed, bringing the total to 200.

The buildings will house three laboratories. The first will develop ground and aerial sensors providing data on all important agricultural parameters; the second will develop powerful information processing tools; while the third will develop solution implementation systems, said Crnojevic-Bengin. Farmers and agribusiness representatives will be invited to familiarize themselves with the systems on demonstration farms, added Crnojevic-Bengin.

18) Agricultural exports total USD 3.2 billion March 7th, 2017, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:653599-Suficit-u-agraru-17-milijardidolara

In 2016, agricultural exports totaled USD 3.2 billion, an 11.9% increase year-on-year, while imports totaled USD 1.4 billion, a 10.7% decrease compared to two years prior, according to the Serbian Statistical Office. The largest exports were: corn at USD 346 million; tobacco at USD 277 million; frozen raspberry at USD 248 million; and wheat at USD 134 million, according to agricultural analyst Vojislav Stankovic. Other significant exports include apples, sugar and sugar beet. The largest imports were raw coffee, bananas, oranges, tobacco cigarettes, and frozen pork, said Stankovic.

Serbia’s main export markets are the EU, the Wester Balkans, CEFTA (Central European Free Trade Agreement) members and Russia, accounting for 89% of agricultural trade, reported Stankovic. Since 2001, the trade surplus with the EU has steadily increased from USD 170 million to USD 1.4 billion, while imports currently stand at USD 846 million, according to Stankovic. Exports to CEFTA countries totaled USD 1.2 billion while imports totaled USD 126 million. Exports to Russia totaled USD 321 million while imports totaled USD 42 million. The free trade agreement with Russia is not fully exploited and provides AN opportunity for Serbia, concluded Stankovic.

Page 6

BFC Agriculture Bulletin

19) Organic exports at EUR 19.6 million March 5th, 2017, http://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:653176-Organska-hrana-iz-Srbije-osvajasvet

In 2016, Serbia exported EUR 19.6 million worth of organic products, according to Serbian Academy of Sciences and Arts (SANU) agricultural analyst Branislav Gulan. There are currently 2,000 organic farms across Serbia covering 15,000 hectares. This amounts to 0.44% of arable land an leaves much room for expansion, argued Gulan. Cereals, fruit and industrial crops accounted for 32%, 22%, and 20% of total organic production respectively, according to Gulan. The produce is mostly exported to EU counties – mainly Germany and the Netherlands – but also the United States. Almost the entire frozen and dried organic harvest ends up in the EU, reported Gulan. Despite high prices, organic products are also popular on the domestic market. Though receiving many export offers, organic vegetable producer Vladimir Carter caters to the domestic market only. This is partly to satisfy customer demand, but also because the export process is complicated and production volumes are too low. Export would require heavy investment in production and labor, argued Carter, which is currently difficult to come by. Carter’s farm currently spans 15 hectares.

Page 7

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.

All rights reserved by the authors.

BFC takes no responsibility and does not make any representation or warranty, express or implied, or assume any responsibility whatsoever for the content, accuracy, and reliability, or completeness of any of the articles.