Serbia Newsflash Week 45

A new international trade agreement, agroeconomy figures, aid to young farmers, regional business news and animal disease - The week in Serbian agriculture

Fruits and vegetables on a stand in a market
©Photo Mix
With the new trade agreement between Serbia and the Eurasian Economic Union, Serbian products will be able to freely reach a market of 193.8 million people and $1.9 trillion in economic value.

Agricultural production rises by over 5% in 2020

In 2020, Serbia’s agricultural production will grow by over 5% compared to 2019, and its share in the country’s GDP will exceed 9%, stated the Minister of Agriculture. “We will have a notable rise of over 5%, so the share in Serbia’s overall GDP will be 9.7% or 9.8%. Maize harvest is not over yet, but I can already say the yield is nearly 10% better compared to previous years,” said the Minister for the national broadcaster, RTS. According to him, the current maize yields are 30% higher compared to the ten year average, and soy yields are 60% higher.

Russian Parliament ratifies free trade agreement between Serbia and EAEU 

The upper house of the Russian parliament ratified a free trade agreement between Serbia and the Eurasian Economic Union (EAEU) on November 3rd, with the agreement taking effect within 60 days after all the member state parliaments ratify it. Besides Russia, the FTA has been ratified by Belarus. Kazakhstan, Armenia, and Kyrgyzstan are expected to also finalize the necessary internal procedures in 2020 so that the FTA can come into force in 2021.

The agreement gives goods from Serbia equal treatment on all the markets of the Union and expands the number of products that can be imported without paying customs and raises quotas for limited-quantity goods. It also imposes the obligation of liberalizing mutual trade in line with the World Trade Organization regulations. It was signed by the prime ministers of Serbia, Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan as well as the head of the Eurasian Economic Commission in Moscow in October 2019.

The Serbian parliament ratified the FTA in February this year. Customs duties will have to be paid on poultry meat, certain types of cheese, white sugar, sparkling wine, ethyl alcohol, cigarettes in excess of annual quotas, cotton textiles, refrigeration compressors, cars and tractors and used vehicles and tires. The EAEU has a market of 183.8 million people with a total GDP of $1.9 trillion.    

EBRD supporting “Sojaprotein” with €25 million

The European Bank for Reconstruction and Development (EBRD) has provided a loan worth €25 million to Sojaprotein, Serbia’s soybean concentrates producer. The EBRD’s financing will be used for the expansion of the company’s production facilities as well as for debt refinancing. Namely, the aim is to strengthen Serbia’s agribusiness potential, and Raiffeisen Banka Beograd is providing another €25 million loan as part of the project. Sojaprotein will expand production to meet the increasing demand from international customers.

The market demand for soy-based ingredients is expected to continue to increase due to higher consumer demand for plant-based alternatives to meat products, and the EBRD says the company is well-positioned to capitalize on such growth. Sojaprotein operates the largest soybean-processing factory in the country, with a capacity of 250 thousand metric tons per year. The company only uses non-GMO soybeans for processing, with full traceability and origination from bean growers to the production of finished products. Sojaprotein is a subsidiary of Victoria Group, recently acquired by MK Group. (More on this here)

State-owned land leased to young farmers for free

Young farmers in Serbia will be offered a lease of up to 50 ha of uncultivated state-owned land free of charge, and their only obligation will be to put it into use in line with agricultural policy standards, the Serbian Minister of Village Care announced. Serbia had 200 thousand ha of uncultivated state-owned land that was not leased. As he noted, Slovenia gives incentives worth €45 thousand to young married couples who want to engage in agriculture.

“We will see how much we can set aside as an incentive,” the Minister said, adding that there was an idea that local self-government units could purchase abandoned houses and let young farmers use them. He underscored that joining forces was “the only way for weaker farmers to face market challenges,” for their products to reach green markets, and earn an income. “We started focusing more on cooperatives four years ago. We have managed to regain trust as 750 cooperatives have been established in Serbia in less than three years,” the Minister concluded.

Poultry farmers in need of money and IPARD incentives

For the third time, layer poultry farmers are asking the Ministry of Agriculture to postpone the start of the implementation of the Rulebook “Conditions and Space for Holding Layer Poultry”. Poultry farmers have until January 1, 2021 to create the necessary environment for layer chicken farming in line with the norms of the regulation harmonized with the EU standards.  The president of the Association of the Poulterers of Serbia explained that the pandemic and lack of funds made it impossible for farmers to secure conditions in line with the Rulebook. The Rulebook is a copy of the EU Rulebook, passed in 1999, and applied in the EU since 2012. The President of the Association emphasized that no poulterers have received the money from the IPARD fund, although some applied for incentives precisely so that they could harmonize their business with the EU standards.   

Young people laughing in the middle of a field.
©Lionel Goupil
Serbia intends to aid young farmers with free leases of agricultural land parcels up to 50 hectares in size.

Price variations of livestock, fresh meat and cereals (maize, wheat)

The new wave of pandemic led to the cancellation of numerous gatherings and family feasts traditionally organized in the fall in Serbia. This lead to a drop in the trade of meat of 15-25%. Prices at livestock markets are the following: For lambs €1.87-1.95 per kilogram; piglets €1.7/kg; fattening cattle €1.8-1.9 /kg. Low prices could lead to an overall decrease in numbers of livestock in the country.

On top of the low sales figures, an increase in the prices of cereals has been recoded. Prices of maize in Vojvodina reached €0.17/kg or higher (regardless of the humidity percentage). With the current prices of maize and soybean meal, pig farmers calculated production prices of fatteners of €1.3 – 1.36 /kg. Farmers are urging the government to prevent the import of fresh/frozen pig meat and live pigs from Croatia. Poultry farmers are facing production difficulties due to the price increase of soybean meal. Poultry slaughterhouses and meat processors will not accept 25-30% increases in price.

Wheat producers regard this season as financially successful. On the other hand, maize traders, due to futures contracts concluded at the beginning of this year when the prices of maize was forecasted to be €0.14 /kg +/- 10% are now trying to evade their obligations to sell maize at the contracted low price. Future contracts are subject to relevant international trade laws. There were not many future contracts in the trade of wheat.

Bluetongue disease spreads in the region

The OIE reports that Bluetongue was confirmed in Serbia, Montenegro, Bosnia and Herzegovina and Albania. It is a non-contagious, viral disease spread by biting insects. It affects ruminant species, particularly sheep. Bluetongue causes many different symptoms in affected animals, including ulcers, sores, painful hooves, lameness and reproductive problems. All measures for prevention of the spread of the disease are implemented.

EU launches Access2Makrkets portal for businesses

The European Union launched the Access2Markets online info portal to provide support to small and medium sized trade companies in Serbia that want to enter other markets. The portal provides all necessary information on the EU trade agreements, customs duties and procedures, taxes, declarations of origin, import and export requirements and trade barriers in the EU and more than 120 countries across the world. The portal was set up for companies, business organizations, chambers of commerce and business advisory bodies, export promotion organizations and companies looking for goods providers outside the EU. Access2Markets provides access to annual trade trend reports from 2002 onwards and allows companies to report trade barriers.

The common regional market helps to achieve European standards 

The action plan for achieving the Common Regional Market in the Western Balkans, which includes the Mini Schengen proposals, should be implemented at the level of all six countries in the region, helping them achieve European standards on their path to EU membership, said participants in the online panel discussion "Common regional market for the Western Balkans. The road to a truly integrated region". The document "Common Regional Market - a catalyst for deeper regional economic integration and a step towards the EU single market" is an action plan for the period 2021-24, which will be presented at the summit of the Western Balkans in Sofia on November 10.

Introducing the document, Deputy Secretary General of the Regional Cooperation Council stated at the online meeting that the Common Regional Market is not a substitute for European integration of the Western Balkan countries, emphasizing that the document uses existing EU standards and commitments under European integration – parts of Green Agenda: de-carbonization; circular economy; fighting air, water and soil pollution; sustainable food systems and nature protection and biodiversity.  

The action plan was prepared by the Regional Cooperation Council (RCC), together with the region's governments, the EU, CEFTA and other partners. Western Balkans, as a part of Europe, has to follow the developments in the EU. The RCC Secretary General pointed out that this is a plan that should be realised at the level of all six countries of the Western Balkans. "Together with the European Commission, we managed to build a joint plan on the Common Regional Market," stated the SG. 

Business without barriers in the region and with the European Union

The Business Council of the Joint Chamber of Western Balkans Six called on governments and participants in the regional integration process to support a barrier-free market. They called on the European Union to ensure inclusive enlargement - full opening of the European market for companies and products from the Western Balkans even before full-fledged membership, in areas where European standards, harmonized rules and established institutions are met. "The Council, which consists of owners and managers of 16 large business systems from all six Western Balkan economies and almost all production and service sectors, which have companies and business operations throughout the region, employs 25 thousand people and together achieve more than 2.8 billion euros of annual income will represent the interests of the private sector of the entire region," said the President of the Board of Directors of the Chamber Investment Forum and president of the Serbian Chamber of Commerce.

Photo credit:
"The market" by Photo Mix via Pixabay