EC asks Serbia to withdraw dairy import duties

New agriculture census coming, declining livestock figures, the advantages of buying locally, rising food and energy prices due to inflation -Our weekly briefing on agriculture, food and nature news in Serbia.

A jug and a glass filled with milk is placed on a table in front of a sunflower field
Beeld: ©Couleur

European Commission wants Serbia to revoke import tax on dairy products

The European Commission (EC) requested that Serbia withdraw the previously introduced levies on the import of milk and dairy products, states the letter sent to the Prime Minister of Serbia, Ms. Ana Brnabic, the EC confirmed to TV N1.

The EC sent a letter to the Prime Minister expressing concern over the various trade restrictions that Serbia has implemented in the past months, including the recently introduced  importing fees on milk and dairy products. Serbia did not consult the EU before implementing the levies, so the EC is calling for these restrictive measures to be withdrawn.

Serbia hasn’t met the obligations from the Stabilization and Association Agreement with the EU, because it didn’t consult the EU before implementing those measures and because Serbia didn’t provide a satisfactory justification for their implementation – the EC confirmed for TV N1. The letter invites Serbia to withdraw the implemented measures and points out that the unjustified new trade restrictions violate the conditions from the Regulation 1215/2009 and the amended Regulation 2020/2172.

On February 17, the Government of Serbia adopted the decision that pertains to the implementation of levies (import fees) of €0.12 per liter of milk and €0.25 per kilogram of seven type of cheeses: Emmental, Cheddar, Edam, Tilsit, Kashkaval, Maasdam and Gouda.

Farmers have reacted positively to the implementation of the import fees when it comes to milk, but they are still calling for the implementation of considerably higher levies on Kashkaval and other hard cheeses – ten times as high as the current ones. Dairy farmers continue protesting. On Friday, March 10, they blocked the Sabac Bridge for two hours, demanding milk premiums to be increased to €0.17 and subsidies per head of livestock to be increase to €340.

Representative of dairy producers from Banat region, Mr. Vukasin Bacina, said that dairy farmers are facing the problem with imported cheese and are asking the Government and the Ministry to limit the margins on dairy products in retail chains. “We agreed on imposing a milk import tax of 0.12 EUR/liter, which is currently a very good solution for dairy farmers. Now a new problem arises - with the import of cheese. Retail chains import cheese at a price of €2.7 per kg, and the production price of cheese in Serbia is €6 per kg,” said Bacina in a statement.

He explained that this creates an additional problem in milk production because dairies cannot sell their products and are piling large stocks. As he stated, the European Union has a surplus of milk and dairy products on its market because they do not export them to China and Russia, and in order to protect its producers, the EU subsidizes the export of milk and cheese. “I would like to point out that many retail chains have stopped buying cheese from local dairies and switched to buying imported cheese. Dairies are forced to delay the payment of milk to farmers and salaries to employees,” says Bacina. Also, he emphasized, dairies will be forced to cancel the purchase of milk. “In order to prevent all of the above, we, the milk producers are asking Serbian government to solve the problem of excess stocks in dairies as soon as possible and to immediately protect milk producers, dairies and their employees with this move,” emphasized Bacina, adding that the end price consumer pays is as much as €16.4 per kg of cheese that has been imported at a price of €2.7.

 The agricultural census to be implemented in Q4 2023

The agriculture census 2023 will be implemented by Statistical Office of Republic of Serbia with the support of the European Union. It will begin on October 1st and will last until December 15th. The first agricultural census was held in 2012, and in accordance with the EU standards, it is scheduled to take place every ten years. Between the two censuses, every third year a survey on the structure of agricultural holdings is conducted, in order to update the census data. Due to a lack of funds, this survey was conducted in Serbia for the first time in 2018. Survey data showed that the number of agricultural farms has decreased by 62.000. Namely, in 2012, there were about 628.000 agricultural farms and 2.000 legal entities in Serbia, reports Agronews portal.

Annual decline in livestock production in Serbia is 2-3%

Livestock production in Serbia has been in crisis for several decades, and the volume of livestock production decreases by 2-3% annually, it was said at the Livestock Industry meeting “What’s Next” organized by the Regional Chamber of Commerce of the West Backa District.

“The very fact that the ratio of plant and livestock production is 70:30 in favor of the former speaks about the situation in livestock production. In the past, that ratio was 60:40 in favor of plant production. In developed European countries, that ratio is 60:40, but in favor of livestock breeding,” said Nenad Budimirovic, the Secretary of the Association of Livestock Product and Processing in the Serbian Chamber of Commerce (PKS).

The value of livestock production in Serbia last year was €1.5 billion. The number of cattle at the end of last year was about 800.000, which is a drop of 6.9%, it was stated at the meeting. The production of pigs is also declining, by 7%, so around 2.6 million pigs are bred in pig farming. Poultry production is down by 3.5% and on an annual level it amounts to 15 million chicks. Production in goat farming is around 191.000 heads, which is also a decrease of 1.7%. Production growth of 1.5% was recorded only in sheep farming, where production reached 1.7 million sheep.

 Buying locally produced products will strengthen Serbia’s economy

In the circumstances of global market disruptions, the fact that more than 80% of food products of Serbian producers are found in retail stores is important for the stability of the supply of the local market, said Minister of Trade, Mr. Tomislav Momirovic, during the visit to retail chain “Mercator S”.

“We cooperate with small scale farmers who have a safe and stable product placement through a company like this one. The retail facilities of Mercator S represent a large platform within which small producers should find their space in the entire country,” said the Minister. The Minister stressed that the Serbian government and the Ministry of Trade would always provide strategic support to companies that help, under fair market conditions, small scale local producers, with the belief that stable cooperation would continue in the coming period.

“Mercator S is successfully accomplishing its mission, which is to support small producers, as well as the entire Serbian economy. That's why we call on all local producers to form solid partnerships that will enable them to safely market their products,” said Mercator S CEO Violeta Kovacevic

Y-o-y inflation in February rose the most due to food and energy prices

Y-o-y inflation in February amounted to 16.1%, which is in line with the expectations of the National Bank of Serbia (NBS) and the projections for the first quarter, the Central Bank announced. Around two-thirds of the headline inflation is still attributable to the increase in food and energy prices, according to the NBS. Core inflation (consumer price index excluding food, energy, alcohol and cigarettes) continued to move at a significantly lower level than headline inflation – in February it was 11.1%, which is largely the result of the preserved relative stability of the exchange rate in extremely uncertain global conditions, the announcement reads.

According to the current projection, the NBS expects that y-o-y inflation will remain at a similar level in March, primarily as a consequence of the consistent transmission of high cost-push pressures from the previous period to the prices of food and other industrial products, as well as the correction of electricity and gas prices. The NBS estimates that inflation will strike a downward trajectory from the second quarter, with a significant drop in the second half of 2023, so that at the end of the year it should be half the current level.