Face to Face with COVID-19 - Serbia

It has been three weeks since the start of state of emergency in Serbia and the dust is settling. Updates on agriculture in Serbia.

A person reading news of the coronavirus on a computer screen and a smartphone

The picture is becoming more clear and the roads seem to be secured. Transport is taking place with some delays. Compliments to the Governments of WB6 countries in speedy establishment of “green axes” transport corridors throughout the region – in conformity with “green lines”, the European transit corridors.

More technical info here and here.

In the first two weeks of the pandemic more than 20.000 lorries crossed over Serbian territory. It turned out logistic was not that difficult to handle comparing to other challenges in Serbia. Delays of supply from the Netherlands take about 3-4 days; from Spain 5-6 days. Deliveries from Italy are almost stopped at the moment due to unwillingness of the drivers to travel to Italy. Deliveries to the Russian Federation is taking place with minimal delay (2-3 days).

Field works and spring season preparation

Where to get seasonal workers? How to respect all governmental measures regarding social distancing in getting workers to/from the field? On the top of this, also the curfew has to be respected between 5 pm and 5 am. Besides the daily obstacles and confusions, the spring sowing activities are very intensive. Farmers expect higher prices for their products during and after crisis period, thus increased field activities are noted in order to conduct all necessary preparation for the sowing season.

The Ministry of Agriculture reacted promptly with on line notification for companies and farmers for getting permits for movement outside of set curfew:

One question still remains open: If one worker is found positive on Corona, will all other workers from the shift will need to stay in quarantine for 14 days? This could seriously impact any production cycle.

Small scale businesses (bakeries; dairies; family farms)

Due to the closure of gastronomy, schools/kindergartens and green markets small businesses are completely left without a market for their products. The Ministry interfered  by redirecting raw milk to the big dairy processors that deliver to the retail chains. Small craft bakeries noted a 70-90% turnover decrease and might lose their market completely. Unlike small bakeries, the large makers of baked goods are posting even better results than usual, since they are delivering to special shops and retail chains.

Small vegetable and fruit producers that sell at green market are also hit drastically. In smaller cities the entrepreneurial nature is evident since  most of them reoriented to home delivery due to established relationships with customers. Also in the bigger cities, there are attempts to initiate on line sales. Unfortunately not everybody is supported by these attempts for shortening supply chains. As Producers Groups and Producers Organizations are basically missing in Serbian agriculture, it is difficult raising their voice and bring forward their needs and articulate demands.

Contracts with retail chains is currently a blessing!

After the panic purchasing stopped it was obvious that food supply is not going to be a problem in Serbia. Nevertheless, Government limited margins in retail of 8 commodities to the level of March 5th but increase in price is possible but due to the increase of production price of increase of transport price. (More details on the regulation here (Serbian language))

Big supermarket chains in Serbia registered a y-o-y increase of 61% in the sale of consumer goods during the third week of March 2020, whereas the fourth week of March saw a 43% rise y-o-y. Retail chains saw a rise in sales with an enormous growth in certain categories, such as disinfectants (702.9%) and toilet paper (261%). As for food sold in the third week of March, the biggest increase was observed in terms of flour (482%) and yeast (224.4%), whereas oil sales went up by 168.1%. Having contracts and being able to deliver to retail markets is in the current situation a privilege.

Export to the CEFTA region

Upon request from the region (BH; North Macedonia, Montenegro), a temporary ban on flour export was cancelled and flour has been exported to the region. Also, yeast factories boosted yeast production to the full capacity with enough production for Serbian and surrounding markets. Serbian officials stated that enough food will be supplied to Serbian but also neighboring markets.

Frozen fruit market

Interviews with frozen fruit companies indicated an increased demand in export, stimulated by the stockpiling behavior of consumer in other markets. The price of the products of frozen fruits is stable with noticeable increase in demand and in price (frozen berries and sour cherries). Main export market is Germany, but also other export markets show growth. There is also increased demand for the frozen products (fruit and vegetables) for the local supermarkets.

Governmental economic support measures

In order to react on the dramatic situation and developments, the government has prepared a package of measures to help the economy and citizens of Serbia during a state of emergency. This corona pandemic packages has a value of 5.1 billion EUR, which is almost half of the budget of Serbia.

Measures envisaged by the aid package are related to:

  1. Tax policy : the payment of taxes and contributions on income for private companies is postponed during the state of emergency for at least three months. Payment of the profit tax for the second quarter is also postponed. All those dealing with donations are exempted from paying the value added tax. (1.3 bn EUR)
  2. Direct assistance to entrepreneurs: direct help to all entrepreneurs flat rate taxpayers and those who earn real income, micro, small and medium-sized enterprises (MSME), in the amount of three minimum wages, totaling 830 miln EUR
  3. Liquidity support: this measure relates primarily to the private sector and it amounts to 2.2 billion EUR. These funds will be aimed at maintaining the liquidity and providing the working capital for entrepreneurs. The Development Fund will allocate 200 million EUR for subsidized loans at 1% interest rate for entrepreneurs, MSME, farms and cooperatives, and the state will enable entrepreneurs to take cheap loans in banks, through the guarantee scheme for loans with 2 billion EUR.
  4. Assistance to every adult citizen after the crisis: the direct support to each adult citizen of Serbia of 100 euros (in dinars)(600 mil EUR)
  5. Additional assistance to specific sectors hit the most HORECA; vegetable producers; dairy producers. Those sectors will be monitor and specific set of measures will be prepared (due to closing of green markets; for small scale dairies, bakeries  that had to close due to closure of local HORECA and schools and kindergartens).  All farmers will be granted subsidies for spring season (direct payments) with less administrative burdens and moratorium on the repayment of credits for 90 days.

The assistance program would not apply to companies which reduced the number of employees by more than 10% from the beginning of the state of emergency.