Serbia Newsflash Week 37

Cattle subsidy, business news, frozen fruit export, cross-border cooperation and a new program for innovative SMEs - The week in Serbian agriculture

A bowl of fruit
©Sosinda
According to the latest market figures, Serbia is the second largest frozen fruit exporter in the EU after Poland.

Serbia second in EU frozen fruit production

In frozen fruit production Serbia is in the second place in Europe, just after Poland. In tobacco production and sunflower oil production Serbia ranks also high. According to the portal Makroekonomija, Serbia would bring into the EU more than 2% of the capacity in agro - food processing industry output. This area is one of the areas in which Serbia is more developed than some member states of the EU. Eurostat runs a database on production, trade, quantities and values of industrial production per countries. Makroekonomija.org has analyzed 428 out of 4.476 food products and specifies how much certain sectors would increase the overall EU production if Serbia would be a full member state.

Frozen fruit production is a part of the food processing industry. When produced quantities are compared, Serbia produces 34.2% of all frozen fruit in the EU. According to Eurostat, besides Poland (the biggest EU producer), the only other important player in this type of production is Italy. Predominant fruits for frozen fruit production in Serbia are berry fruits (raspberries, black berries and some blueberries) but the list also includes sour cherries which are mostly exported to Germany. The main suppliers of the frozen fruit to the EU market besides Poland and Serbia are Ukraine, Morocco and Egypt. Serbian sunflower oil production is also competitive, where it ranks fourth in the EU, after Bulgaria, Hungary and Romania. Tobacco industry ranks also high but not as high as the two mentioned. Tobacco industry is larger in Poland, Germany and Romania.

Serbian farmers buy more agro machinery

Agricultural farms in Serbia significantly increased the supply of agricultural machinery in the first half of this year, despite difficult business conditions during the pandemic, according to the Serbian Chamber of Commerce . As an example, they cite the number of agricultural machines called “telehandlers” sold, which is a widely used piece of machinery also known as a telescopic handler. In the first half of the year, a total of 140 units of these handlers were sold, which is a 45.8 % increase from the same period in 2019. The growth of sales of agricultural machines was also contributed by the third Public Call for applications for approval of projects for IPARD incentives for investments in physical assets of agricultural farms, as well as the planned incentive measures within that call. According to the IPARD terms, incentives are determined in the amount of 60 % of the total eligible costs of the investment, i.e. 65 % if the investment was realized by farmers under 40, and 70 % for investments in mountainous areas (less favorable areas).

SPAR is not coming to Serbia due to high rent prices

SPAR does not intend to invest in the Serbian retail market at the moment”, Christian Sperger, head of the project development department at ASPIAG, told Retail Serbia. According to unofficial information, ASPIAG (Austria Spar International AG), the owner of the SPARlicense for Serbia, did examine the market, but the management gave up, allegedly due to the high price of rent. SPAR has already tried to enter Serbia several times, first in 2007 by building hypermarkets in Belgrade and Vojvodina, and then by acquiring certain retail chains. However, after detailed analyses, those plans were abandoned. At the end of last year, the media in Serbia reported that Spar would take over the local retail chain “Aman” and thus enter the Serbian market, but this information was denied by Aman soon afterwards.

“Foreign retail chains should be obliged to sell domestic products”

“Foreign retail chains should be legally bound to have a certain percentage of domestic goods on their shelves”  stated the opposition People’s Party (PP). “Local farmers cannot sell their apples because foreign retail chains have their suppliers. Serbian farmers struggle to find purchasers and resellers so that their apples can reach Russia or Poland as soon as possible,” representative of PP, Mr. Kovacevic explained. According to him, the situation is similar in terms of cattle breeding since the price of bulls fattened for export declined drastically, but in the end, they were not exported abroad, and cattle breeders invested a lot of money in animal feed. “The price of pigs has dropped from €1.36 to €1.14 per kg. That is an abnormal situation, and the system needs to be regulated as soon as possible,” Kovacevic pointed out. He also underlined that economic patriotism was the foundation of the Party’s program.

€2 million aid for cattle breeders

Due to the general drop in demand for beef on the world and domestic market by as much as 70%, the government decided to help Serbian breeders through the intervention purchase of fattening cattle worth two million euros, the Ministry of Agriculture informed the public. The relevant ministry stated that the buyout price of cattle of almost €2.15 per kilogram was thus secured. Although exports to China and Turkey have resumed, the purchase decision was made in order to preserve beef production in Serbia due to all the negative consequences of the coronavirus on the meat market, according to the Ministry of Agriculture, which will implement that assistance. Producers asked for help last week, as the buyout price per kilogram of live weight dropped to €1.2, which is below the basic production costs.

fresh bread dough
©Pexels
Small craft bakeries in Serbia have recorded turnover losses of 70 to 85%.

Small bakeries in a tight spot  

Due to the situation with the coronavirus pandemic, small craft bakeries in Serbia have recorded a loss of turnover of 70 to 85% and are facing market losses, said the president of the Union of Bakers of Serbia. "I think that some 60 to 70 % of bakeries are on the brink of extinction, and about to close," warned the President. He said that additional state support measures would facilitate the operation of small bakeries across the country, which are losing market share, while large bakery industries, which supply retail chains, are recording an increase in turnover. The President of the Bakers pointed out that small bakeries have a big problem in finding experienced staff because many bakers go abroad, which has led to their salaries being higher now than before. He appealed to bakers to respect the regulations, on the occasion of the recent closure of about 300 bakeries due to non-issuance of fiscal invoices and non-registration of workers, but pointed out that it was not easy to organize work and register workers in a situation when they stay with one employer for a short period of time.

Serbian businessman eyes Croatia’s agro company, management is agains it

Serbian businessman Petar Matijevic, the biggest landowner in Croatia with 2,500 ha of land, intends to purchase the Tovarnik-based company Agro-Tovarnik, which  would make him the owner of 3,350 hectares of arable land in Croatia. Matijevic, who owns a meat processing company bearing the same name and a group of over seventy companies and 30,000 ha of arable land in Serbia, has submitted an offer to Agro-Tovarnik in order to buy the company, that is, a share held by the company’s director and employees. According to Agrosmart portal, Matijevic is willing to pay a total of €10 million for Agro-Tovarnik. Every shareholder (70 of them in total) would get EUR 100,000 for one percent of their stake. The offer was made by Matijevic’s company registered in Croatia. However, the management of Agro-Tovarnik opposes the idea, and several business associations have asked the Croatian government to prevent the sale. In addition, there is a bylaw that bans the sale to someone who is not already a shareholder unless the majority of them agree, Agrosmart pointed out, underscoring that the offer was so good that many shareholders would probably accept it.

Cross border cooperation on navigation routes between Serbia and Romania  

Serbia and Romania plan to reconstruct the locks on the Begej canal in Vojvodina, in Srpski Itebej and Klek, through a cross-border cooperation project funded by the European Union (EU), which will re-establish a nautical link between the two countries after 60 years, the EU InfoCentre reports. The project, which is financed with funds from the Interreg-IPA Cross-border Cooperation Romania-Serbia, includes the overhaul of the construction part of the facility of the locks and the constitution, as well as the installation of new hydro machine equipment, the statement said. The total value of the project is EUR 13.9 million, of which 85 percent is EU grants in partnership with Vode Banata and the Timis County Council from Romania and Vode Vojvodina and the Provincial Secretariat for Regional Development, Interregional Cooperation and Local Self-Government from Serbia. In addi-tion to reconstruction of the locks, bike lanes will be built, as well as a floating dock, a dredger and a mower will be procured, and a project for cleaning the sludge will be made so that the Begej canal from Klek in Serbia becomes navigable for cargo ships up to 500 tons to the border with Romania.

World Bank launches program for innovative SMEs in the Western Balkans 

The World Bank, under its PowerUP: Capacity Building for Early Stage Firms in the Western Balkans programme, is launching a dedicated program for more than 200 companies funded by the European Union under the Western Balkans Enterprise Development & Innovation Facility (WB EDIF) and implemented with the support of the eminent consulting firm Deloitte. PowerUP is a free of charge program designed for SMEs and start-ups who are looking for new ways to attract customers, adapt their business models, and who are potentially interested in the outside investment. All selected participating companies will receive capacity building support and training package aimed at increasing their investment readiness and supporting their growth prospects and resilience to COVID-19 and similar external shocks. The capacity building program would provide valuable know-how and focus on the topics of customers and market, financial and internal performance, branding and pitching. The Program is aimed to last from October 2020 until February 2021.