Serbia Newsflash Week 44
New cabinet, export to China, cereal price increase, pandemic effects, foreign investment and e-commerce - The week in Serbian agriculture
New Serbian Cabinet elected
The National Assembly of Serbia approved the new Cabinet of Prime Minister Ana Brnabic. There are some new faces in the new Government, some Ministers have been reshuffled and some preserved their previous position. The Ministry of Agriculture, Forestry, and Water Management will be headed by Mr Branislav Nedimovic as before. Since the new parliamentary elections are announced no later than April 2022, it is good to have the old/new Minister heading the sector of agriculture, to have continuity in agro policy and the EU integration process. As stated by the PM in the previous week, significant attention will be given to the agriculture and rural development sector within the new Cabinet. This statement is backed by the establishment of the new Ministry for Village Revitalization. This sector will be headed by the Mr Krkobabic, who was Minister without portfolio in the previous Cabinet, dealing with development of rural areas and agro cooperative system.
Green light for Serbian export of dairy products to China
After several months of intensive cooperation, exchange of documentation and constant communication with the Customs Administration of China, which followed the audit by the Chinese inspection, new facilities were authorized to export dairy products to the Chinese market. Last week China’s Customs authorities have finally given the green light to another three Serbian dairies. In August this year, the first two dairies were approved in terms of exporting dairy products to the Chinese market – see more here.
According to the website of the Veterinarian Department of the Ministry of Agriculture, at the moment, the list of registered exporters of dairy products to China features five business entities from the food sector: Mlekara Ub, Mlekoprodukt, Meggle Srbija, Imlek AD and Somboled. “This is the first time that the dairy sector is authorized for the export to China, which is the world's largest market and as such, a considerable exporting potential for Serbian dairy companies and an opportunity for the further upgrade of the dairy sector. By maintaining the good cooperation and the friendly relations with its colleagues from the Customs Administration, the Veterinarian Department is making further efforts to have all other interested business entities authorized to export dairy products and to be put on the list of exporters to China,” it is added. The Serbian Minister of Agriculture has announced in early 2019 that Serbia would start exporting dairy products and pork to China. An agreement on that was signed in June 2019.
Wheat and maize prices are on the rise due to higher demand
The sudden rise of some 10% in wheat and maize prices on the Novi Sad Commodity Exchange is the result of global market price increases. The reason is an increase in demand amid the ongoing pandemic, said the Director of the Serbia Grains Association (engaged in advancing the production and export of grains and oilseeds). He explained that the demand for grains around the world was growing to ensure food security. The fear of a new wave of epidemics has forced large world consumers of wheat, such as Egypt, the countries of the Middle East and China, to make reserves and buy more than they would otherwise. Demand was further increased by large investment funds, primarily in the US, which directed their funds to agricultural products since the industry works less due of the corona pandemic, and thus they bought quite large quantities on the stock exchange. Another reason behind the rise in the price of wheat is draughts and problems with sowing in Russia. Serbian prices are in line with the trends in the global market, and wheat is expected to be cultivated on a larger area, around 600 thousand hectares, as opposed to last year’s 560 thousand. Serbian grain producers usually do not offer grains for sale while the price is still growing because they want to wait for the highest price. However, smaller quantities (several thousand tons) are exported to Africa. One of the reasons is the lack of available barges because they are used for maize exports. The stock exchange contracts for corn on the Commodity Exchange in Novi Sad at the end of last week were concluded at the prices of €0.15-0.16 per kilogram without VAT, while the contracts on the shipment of the goods in the port were concluded at the price of €0.165-0.169/kg without VAT.
Vojvodina has the largest soya production area in Europe
Soya does not have a long-standing production history in Serbia. The crop had its sharp production peaks over the years: In 1975 it increased from 4,4 to 20.9 thousand tons; in 1982 from 84.6 to 179.6 thousand tons and in 1999 from 159.9 to 294 thousand tons. Only in the last three years does the record show a stable increase in production: 2017 – 461 thousand tons; 2018 – 645.6 thousand; 2019 – 700.5 thousand and in 2020, 806 thousand. Serbia is the second largest producer of soybeans in Europe, just after Italy, with a potential to reach the leading position. In 2019, Serbia accounted for one-fourth of the total soya production in the EU. In 2020, this share will probably be higher. Assessing soya production from the level of euro-regions, Vojvodina ranks the first among more than 300 European regions. More about soya production in Serbia here.
Prices of arable land stabilized
After price oscillations, the land market has stabilized in the third quarter of the year, shows a report by the Serbian Cadaster Office. Prices of land parcels are in constant rise, the most expensive land being in the south Banat region where prices vary from €8.5-28 thousand per hectare. In the North Banat and Backa regions the prices are lower, ranging from €3 thousand to €18 thousand/ha. Whereas, in South and Eastern Serbia, prices per hectare of land range from €3.5 thousand to €15 thousand. 99% of all transactions are performed in cash.
Prices of arable land are very different in the EU member states. Bulgaria is among the cheapest countries in the EU when the land market is concerned. Land parcels in South-Western Bulgaria are sold for €1 thousand/ha and in the north-east part of the country prices reach €6.9 thousand/ha. The most expensive agricultural land in 2018 was in the Canary Island with a price of €133.8 thousand/ha, followed by Flevoland in the Netherlands with €104.3 thousand/ha.
Fruit producers benefited from the COVID-19 pandemic but meat producers suffered greatly
While the coronavirus disease pandemic pushed certain sectors to the verge of collapse, to others it resulted in the increase of sales. Fruit and vegetable producers in Serbia managed well throughout the pandemic. Some fruit producers (berry fruit; frozen berries; cherry producers) recorded increases in export of up to 20% while meat producers experienced just the opposite trend – a decrease of 20%. In the first half of this year, agro exports had increased by 10.3% compared to the same period in 2019. Data from the Statistic Office of Serbia show increases in the export of cereals (grains) of 9.8% and increase of export of pome and stone fruits of 19.8%. More about this here.
E-commerce up by more than 200% during the pandemic
The pandemic has forced many people to buy groceries online for the first time, and the trend brought about by the online shopping period will probably change the way people do shopping even after the crisis. Buying books, electrical appliances and ordering ready-made food through delivery apps were expanding even before the coronavirus crisis, but since the pandemic, e-purchase has recorded significant increase of customers and the habit remained. Supermarket chains and food shops record the increase of more than 200% in e-purchasing of healthy snacks, fruits, vegetables, meat and all other groceries.
Regional governments urged to set up “Green lanes” to expedite movement of workers
Chambers of Commerce of the six Western Balkan economies, part of the Chamber Investment Forum, released a joint statement urging Western Balkan governments to reach an agreement amid the stricter preventative measures against COVID-19 and establish green lanes for the free movement of businesspeople and their employees. Namely, green lanes already exist in terms of the movement of goods, so this would facilitate travel for those who need to visit other countries in the region for business. Chamber presidents, representing around 350 thousand member companies in the region of Western Balkan, suggested that the governments should reach a mutual agreement and accompanying protocols to determine simplified and coordinated rules and procedures. They need to be valid in the entire region, regulating all the issues concerning cross-border travels and the stay of businesspeople, their employees, engineers, and other workers sent to other Western Balkan countries for business purposes.
Old giant back in the game
Four months after the re-start of production in the food processing facility Budimka, an old-time giant in fruit and vegetable processing, all processing lines work in full capacity. Around 110 farmers from western Serbia have delivered approximately 10 thousand tons of apples to the facility. This is half of the planned purchase of Budimka for this year. Fruit juices and marmalades are the main products. Farmers from Western Serbia are thrilled that this processor is operating again. The supply chain of inputs for the processor is significantly shortened and storage and logistical costs of the framers are drastically decreased. “everything is at my doorstep” stated one of the fruit farmers from Pilatovic village. He gathers his apples on a weekly basis and delivers to the factory. Payments to the farmers are regular. Budimka was the biggest food processor in western Serbia for decades. It was a processor majority of south-western Serbian fruit growers depended on.
Nine Hungarian companies to invest €75 million in Serbia
Yesterday, Serbian Finance Minister Sinisa Mali met with Hungarian Minister of Foreign Affairs Peter Szijjártó, who commented that Hungary had supported nine local companies with €25 million in their investments in Serbia. Minister Szijjártó pointed out that the value of the overall investment would be three times higher, reaching €75-80 million. As the Ministry announced, the companies will invest in logistics centers, the pharmaceutical industry, fruit processing, and the metal processing industry, mostly in central and southern Serbia. As for Vojvodina, the Economic Development Project will continue, offering support to SMEs. Mali highlighted that the nine companies’ arrival in Serbia was great news and a good signal from the Hungarian government, especially during the coronavirus pandemic. He added that they would hold a joint meeting with representatives of all the companies so that they could start operating in Serbia as soon as possible. The ministers also discussed the two countries’ cooperation in large infrastructure projects, with a special focus on the modernization of the Subotica-Szeged rail line.