Serbia Newsflash Week 11, 2022

Important updates to Serbia's cereal export ban, shifting trends in agro exports, increasing input costs, new investments into animal feed and sugar processing, EIB's aid in pandemicrecovery, and Serbia's potential for floricultural domination on the global market - The week in Serbian agriculture

Shelves stocked with cooking oil in a grocery store in Serbia
Beeld: ©Mila Mirkovic
Following up on Serbia's recently introduced cereal export ban, the country reached important agreements with neighboring nations and domestic stakeholders this week.

The delivery of agreed-upon wheat shipments to the region to be allowed

Based on the agreement between the Serbian President and the Albanian Prime Minister, Aleksandar Vucic and Edi Rama, a meeting of the Ministers of Agriculture of the two countries, Branislav Nedimovic and Frida Krifca, was held in Belgrade on Tuesday, March 15 and it was agreed that the export of wheat and maize, which was discussed with Albanian importers before the export ban, would be realized as soon as possible.

“The countries of the Open Balkans Initiative, as well as other neighboring nationd, can count on Serbia as a reliable partner at a time of great challenges in the food sector,” the Ministry of Agriculture stated to news agency Tanjug. President Aleksandar Vucic stated on Tuesday that Serbia would allow the agreed export of wheat to Albania as soon as possible, and added that the same would be the case with every country in the region.

The group of cereal producers of the Serbian Chamber of Commerce (PKS), the Association of Cereal Producers and Exporters, and the Novi Sad Commodity Exchange requested that the Serbian Government allow the free export of flour, as well as the reintroduction of export quotas for wheat and maize from last year. This was agreed upon at a joint meeting of representatives of the Group, the Serbian Grain Association and the Commodity Exchange.

According to PKS, the representatives of the associations point out that the long-term ban on the export of flour, wheat, and maize could soon cause problems because farmers need money to finance their activities in the new sowing season. As they have stated, the consequences will also be borne by the exporters. After the meeting, the Secretary of the Association for Plant Production and Food Industry of PKS, Aleksandar Bogunovic, explained that the exporters pointed out how important it is for them to sell at the current higher prices, thus it is necessary to realize the operation before a possible decline in market prices. Mr. Bogunovic has reiterated that the placement of flour has decreased in previous years and that this moment is a good opportunity for exporters from Serbia to regain the trust of traditional buyers.

On Thursday, the Government of Serbia has adopted the amendment to the decision on the temporary ban on the export of basic agro-food products, according to which the raw oil made from sunflower or safflower seeds is exempt from the export ban.

According to the website of the Ministry of Trade, this product cannot be used for further processing into refined sunflower oil and is most frequently used in the paint and coating industry. It has also been decided for refined sunflower oil to be added to the list of products the export of which is temporarily banned.

The Government of Serbia has adopted the initiative of the Serbian Chamber of Commerce (PKS) for the free export of bottled refined sunflower oil.

The government also adopted an amendment to the decision to limit the fuel prices and allowed sales of oil derivatives to be poured into canisters of up to 60 liters. According to the Minister of Trade, Mrs. Tatjana Matic, this will enable agriculture producers to proceed with their field spring work without difficulties.

Increase in price of agro inputs by 30.7% y-o-y

Inputs prices in the agriculture industry (reproductive material, agro tools and services) in the fourth quarter of 2021, compared to the same quarter in 2020, increased by 30.7%, stated the Statistical Office of Serbia.

Observed by product groups, the greatest impact on price growth was recorded in three groups: Mineral fertilizers (124.9%); animal feed (34.6%); and energy (15.9%).

The most-traded agricultural products in 2021

In 2021, Serbia exported agricultural and food products worth €4.2 billion, and imported goods worth €2.4 billion according to data from the Serbian Chamber of Commerce (PKS).

Last year the total foreign trade of agricultural and food products was close to €6.6 billion, which is 13.1% of the total foreign trade and 15.6% more than in the same period in 2020. During last year, vegetables and fruits were the most exported products from Serbia, alongside with wheat and maize. Throughout 2021, Serbia exported maize in the value of €468.4 million, raspberries for €361.5 million, wheat for €215.9 million and cigarettes and tobacco for €359.1 million, shows data from PKS.

In the case of trading with Russia and Ukraine, Serbia’s main import commodities from Russia were oil and gas and the main export articles were apples, tires and women’s stockings. The main import from Ukraine has been iron ore and the main export was mineral fertilizers, reports the N1 portal. The portal reports on Serbian Chamber of Commerce (PKS) figures showing that Serbia has trade deficits with both countries.

The export of Serbian apples to Russia has been frequently mentioned lately, but for several years now, the Russian Federation has not been Serbia’s only buyer of apples and fruits in general. One of Serbia’s other chief buyers is Germany, according to data from the Serbian Chamber of Commerce.

Throughout 2021, Serbia exported fresh and frozen fruits in the amount of 160.6 thousand metric tons and in the value of €134 million to the Russian Federation. "Until a few years ago, fresh fruit producers were over 90% dependent on exports to the Russian market, however, that dependence is significantly reduced now (to approximately 50%), which is a consequence of the opening of new markets and establishing business cooperation with customers in the UAE, Kuwait, Singapore and India," states the Serbian Chamber of Commerce.

Last year, Serbian imports from Russia were worth $1.8 billion and imports from Ukraine were worth $268.8 million.

According to the PKS figures that the N1 portal reports on, Serbia has 244 companies exporting to Ukraine and 722 importing from the country with 45 companies doing both imports and exports. A total of 577 Serbian companies export to Russia and 1.093 import from it, with 187 companies going both ways.

Red roses.
Beeld: ©Biel Morro
Just like France, Serbia is perfect for the cultivation of flowers, especially roses, due to its climatic conditions - And this provides the country's floriculture sector with a great opportunity as the global market of flowers and decorative plants is growing at a steady rate.

A great opportunity for the development of floristry in Serbia

Serbia has great potential for the cultivation of flowers and ornamental plants due to its favorable climate and a growing demand on the global market.

Consumption in this market is growing at an annual rate of 10%, with a turnover exceeding €200 billion on the global market and about €27 million on the Serbian market. Danica Micanovic, advisor of the Association for Plant Production and Food Industry of the Serbian Chamber of Commerce (PKS), stated that Serbia had good conditions for the cultivation of flowers and ornamental plants, favorable climate, and the length of vegetation period.

Ms. Micanovic points out that along with France, Serbia has one of the best climates for growing roses, of which the country exported €2.7 million worth last year. PKS stated that the foreign trade of flowers and other ornamental plants in 2021 amounted to €27.4 million, of which exports were worth €5.4 million and imports (mainly from the Netherlands), €22 million.

The values of flower exports and imports increased last year by 28% and 44.9%, respectively, compared to 2020. PKS further pointed out that most of Serbia’s flower and ornamental plant exports go to the EU - the Netherlands, Poland, Croatia, Lithuania, and Bulgaria, then to CEFTA and Customs Union countries - Russia, Belarus, Kazakhstan, as well as Georgia and Algeria. Within the import of flowers and ornamental plants in 2021, the most dominant exporter was the EU from where Serbia’s imports were worth €18.2 million while smaller quantities also arrived from Kenya, Ecuador, and Costa Rica.

UBM Group to build an animal feed factory in Serbia

The Hungarian UBM Group started building a feed factory in Adasevci, Sid last week. The company plans to invest around €24 million in the new facilities. The factory will cover an area of ​​20 hectares and will include facilities for the production of animal feed and the storage of raw materials and finished products.

The president of the UBM group, Mr. Péter Horvát, said that the goal of their company is to expand its business and become the most successful company in the region in the field of animal feed production.

MK Group announces new investments 

The largest regional economic gathering, the Kopaonik Business Forum  was held last week  for the 29th time. The “Serbian Davos” was organized by the Serbian Federation of Economists. Speaking at the panel The Investors community perspectives, the vice president of MK Group  Aleksandar Kostic, announced the new investments of their company in the agrarian sector and renewable energy sources.

“MK Group is in agriculture and the food industry. I have to point out that, even without state subsidies for sugar, which the countries in the region have, the company Sunoko, part of MK Group, is the biggest net exporter of sugar in Europe. In the past period, MK Group has invested €1.5 million in a sugar beet research plant, and future plans center around opening an alcohol factory,” Mr. Kostic said. The vice president sees a great potential in renewable energy sources. “MK Group will continue investing in wind power and the agri-solar project.”

EIB invested €853 million in the Western Balkans in 2021

The European Investment Bank Group (EIB) has invested a total of €853 million in the Western Balkans in 2021 in sustainable development, green transition, digitalization, and support for small businesses. Last year, the EIB provided €560 million to small and medium-sized enterprises in the region to help them maintain liquidity, continue investing, preserve jobs and hire more employees. Those funds are available under more accessible and flexible conditions, within the financial package of Team Europe for the faster recovery of the region from COVID-19, the bank reiterated.

The EIB has increased its technical and financial support for climate resilience projects. In 2021, it provided €257 million for environmental protection, a safer and more efficient energy network, sustainable transport, and the introduction of energy-efficient projects in small businesses.