Serbia: Shifting market trends, Open Balkan agreement signing

Open Balkans agreement on food security, rising prices, dairy shortages, greenlight on wood briquette exporting, changing land prices, and the world's most expensive cheese - Our latest briefing on the agro sectors in Serbia

An elderly woman shopping in a grocery store.
Rising food and energy prices in Serbia have raised the country's inflation to 13.2% in August.

Countries of the Open Balkan signed agreement on food security

At the Open Balkan Leaders' Summit held in Belgrade, representatives of Serbia, North Macedonia, and Albania signed several documents that should facilitate and promote cooperation in the exchange of food products, energy, the film industry, audiovisual production, as well as in emergency situations. The Minister of Agriculture of Serbia, Branislav Nedimovic, the Minister of Agriculture of North Macedonia, Ljupco Nikolovski, and the Minister of Agriculture of Albania, Frida Krifka, signed the Agreement on Food Security Mechanisms in the Western Balkans.

Speaking about the importance of the signed documents, the Serbian President, Aleksandar Vucic explained that any decision to ban exports from one of the countries of the Open Balkan would never apply to any of the members of that initiative. “Whatever we have to do because of shortages in the world, everything we produce in Serbia will always be available to North Macedonia and Albania, and vice versa,” said Mr. Vucic.

Rise in food and energy prices raised inflation in August to 13.2%

The National Bank of Serbia (NBS) stated that the increase in food and energy prices accounted for as much as 70% of the August inflation of 13.2%.

Y-o-y core inflation, which can be influenced to a greater extent by monetary policy measures, is still significantly lower than the total and was 7.9% in August, according to NBS. “Under the influence of still strong cost-push pressures and higher import inflation, price growth within the core inflation continued in August. However, core inflation in Serbia continues to move at a significantly lower level in relation to total inflation, as well as in relation to core inflation in certain countries of Central and Southeastern Europe,” the central bank states.

NBS estimates that, according to the August projection of the Executive Board, the y-o-y inflation during the current quarter will most likely reach its peak, and then strike a downward trajectory. It is noted that the current tightening of monetary conditions, the expected weakening of the effects of global factors that led to the growth of energy and food prices in the previous period, as well as lower external demand in conditions of slow global economic growth, will contribute to easing inflationary pressures.

Shortage of milk mitigated by imports

The Serbian Minister of Agriculture, Branislav Nedimovic said that the short-term shortage of milk occurred because the product was more expensive in neighboring countries, so it was more profitable for processors to sell milk to them.

“The fact is that a liter of milk in Serbia cost up to €1.01, and the price of a liter in the surrounding countries ranged from €1.35 to €1.7, and as soon as there is such a difference, the processors automatically look to sell it at a higher price,” said the Minister.

The Beta Agency reported that the shortage of milk in Serbia is currently being mitigated by imports from neighboring countries, thus after ten days, the shelves in some stores are filled only with long-life milk. A few months ago, the Serbian Government limited the price of long-life UHT milk in retail and occasionally slightly correcting it. At the beginning of September, it increased the price significantly, so long-life milk with 2.8% fat costs €1.1.

In order to reduce the shortage, the Serbian Government also banned the export of milk, except to Albania and North Macedonia, members of the Open Balkan initiative. Local milk producers told Beta news agency that the price of imported milk, which filled the shelves in stores these days, ensures decent financial gains, given that milk with only 1% fat is “skimmed,” by extracting the fat for other products that also bring profit. Milk producers in Serbia said that the milk shortage is an "overture" and that situation will only get worse because that sector has been destroyed, and the drought and the freezing of milk prices have further worsened the situation. The owner of a cow farm in the village of Ljutovo near Subotica, Mr. Josip Mackovic, said that the "dairy sector is dead". He added that an unreasonable decision was made when the prices of basic foodstuffs, including milk, were limited, and that the drought this year would not have had an impact on livestock production if the correct policy had been followed and livestock farmers could have created stocks so that now they could bridge the huge increase in food prices and the growth of other costs in that sector. The producers said that the increase in costs in agricultural production is best illustrated by "the little thing that a reel of twine for baling (tying) fodder cost €10, and now it is €17."

Government of Serbia approves export of wood briquettes

The Government of Serbia has adopted the Decision on the permit to export wood briquettes, as announced on the government’s official website. In the past years, the majority of the briquette production has been exported to the EU market, considering that the demand in the local market was low. At the beginning of August, the government adopted the Decree on limiting the price of pellets and the Decision on the temporary ban on the export of pellets and certain wood products of importance for the Republic of Serbia.

One hectare of land in Serbia almost €4 thousand more expensive than in 2021

The average price of a hectare of agricultural land in Serbia in the second quarter of this year was up to €3.917 higher compared to the prices of the previous year, reports Nova Ekonomija. €53.2 million was allocated for the purchase of agricultural land in this period, which is 3% of the total turnover of real estate, according to the data of the Republic Geodetic Authority (RGZ).

As stated, the most expensive agricultural land was in the Belgrade region, up to €59.800 per hectare, and in that area, the highest increase of €3.917 in the price of an average hectare compared to the same quarter of 2021 was recorded.

This year, the average price of a hectare in the capital region was €12.320, and last year it was €8.403 per hectare, writes the weekly. The most expensive square of agricultural land was sold in the town of Kac, in the South Backa district, at a price of €40 per one square meter.

In the Srem district, the record-high prices of land reached €43.550 per hectare, in South Backa up to €33.450, and in South Banat up to €23.000. In Srem, the record-high price of land in 2021 was €24.388 per hectare. In central Serbia (Sumadija) and Western Serbia prices went up to €29.890/ha, stated RGZ.

The most expensive cheese in the world comes from Serbia

The most expensive cheese in the world is produced from donkey milk, and a kilogram is sold at a price of €1.000.

It all started in the special nature reserve “Zasavica”, near Sremska Mitrovica, where they recently started the production of this unusual cheese. Making cheese from donkey milk is a long and difficult process, and the recipe is a big secret kept by the producers, which is probably one of the reasons why there is no competition in the world. It is only known that donkey milk is mixed with goat milk to make the cheese softer.

One kilogram of cheese requires 25 liters of donkey milk, which is the amount that can only be obtained from one animal in two years since these animals, which are milked once a day, give much less milk than cows. Approximately 100 kg of cheese is produced annually in Zasavica.