Serbia Newsflash Week 23

EU accession news, governmental digitalization, Serbian dairy production expanding to Russia, agro economics, international competition in horticulture, and the Serbians biscuits that are conquering the world - The week in Serbian agriculture

Red and green apples
©James Yarema
Serbia needs to technologically adapt to the international market - The country is a dominant exporter on the Russian market but Serbian producers have found a strong competitor in Iran, a country that producers around 1.7 million tons of apples annually.

Half of the regulations Serbia needs to harmonize with the EU refer to agriculture

Half of the regulation that Serbia needs to adopt within its EU accession process refer to agriculture, that is, Chapter 11 (Agriculture and rural development), Chapter 12 (Food safety, veterinary and phytosanitary policy), and Chapter 13 (Fisheries) – stated the Serbian Agriculture Minister Nedimovic at the a session of the National Convention on the EU.

The minister underscored that Serbia’s agricultural budget should be three or four times higher once the country becomes an EU member state. According to the Mr. Nedimovic, documents related to Chapter 11 have already been sent to the European Commission, and he expects no issues there. Chapter 12 is the most sensitive and challenging part for the Ministry, Mr. Nedimovic noted, adding that everything will be done to smooth the process as much as possible once a Law on regulating the agricultural products market is adopted. He also announced that the government adopted that bill at the beginning of June. He expects it to facilitate the Serbian agriculture sector’s integration in the EU, that is, the adoption of chapters referring to that field.

The Law on regulating the market of agricultural products, will soon be before the Parliament. The Minister underlined that the adoption of the bill would allow everyone in the agriculture chain (from producers to refiners) to be positioned precisely, a matter previously regulated by the general law on trade. So far, this has been regulated through the Commodity Reserves. “For the first time, Serbia will regulate the market in terms of agricultural producers, wholesale buyers, and refiners, specifying their position in the system in legal terms. We will have the tools necessary for regulating extremes, with the lowest and high prices, which is something that has been happening with cereals, for example,” stated the Minister for  the national broadcaster RTS. The Minister said that Serbia never had the Law on regulation of the market of agricultural products, but so far it has been regulated in the area of the entire trade. “The Directorate for Agrarian Payments will now have a special body to deal with price tracking, determining producer prices, and regulating fluctuations,” the Minister explained. The new law, coordinated with EU regulations, is expected to come into effect in 2022. The Minister pointed out that every year €350 million is allocated from the budget for subsidies, adding that there would be two more public calls this year. "One will be seriously generous, 60 million euros, for the purchase of physical assets of farms - equipment, facilities, machinery, everything that can serve, those who are small and who want to become medium-sized. We had a competition and from the World Bank and the Serbian government, a lot of money goes to agriculture this year, we are trying to modernise machinery because then there are lower costs and higher profits," states Nedimovic.

Catching up with the EU comes at a cost

As Serbia has made it clear that it is determined to join the European Union, certain laws need to be amended under the Brussels conditions to bring Serbian legislation in line with the EU regulations. Among these legislative amendments, the amendment of the Law regulating excise duty is currently being debated in the Parliament. Serbia has so far tried to protect its brandy production from imported concentrated beverages by applying different tax rates to fruit and grain juices. As a result, imported whiskey and gin, for example, were subject to much higher excise duties than domestic brandy. If the government's amendments are accepted by MPs - imported spirits will soon be much cheaper and domestic brandies will become more expensive. Who will benefit from this change is worth thinking about, because the change is not suitable for the local brandy consumers and makers, for sure. Whiskey lovers, on the other hand, can be happy.

Online register of administrative procedures launched

The Register of Administrative Procedures has been recently launched. It currently includes over 1.600 procedures: services offered to Serbian businesses by 85 public administration bodies and organizations. Director of the Public Policy Secretariat of the Serbian Government, Mrs Tosic says the register will be expanded, and all 2.600 administrative procedures referring to businesses should become part of the register in two months.

Also, the English version of the website should be launched in April 2022 at the latest. The plan for the register is to also contain all administration procedures referring to citizens by 2022 and original processes of the Autonomous Province of Vojvodina and local self-government units by end-2023. According to the Director, businesspeople can use the portal to access request forms, information about documents submitted with requests, the account numbers, and the necessary fee or commissions, as well as all the other relevant information. “This portal eliminates crowds and the need to wait at counters when seeking information,” the Director pointed out.

Sabac dairy to build a factory in Russia

With the support of the Chamber of Commerce and Industry of the Russian Federation (CCI RF), Serbian dairy group Mlekara Sabac will build a factory in Russia. This was agreed upon in Saint Petersburg at a meeting between Serbian Chamber of Commerce (PKS) President Marko Cadez and CCI RF President Sergey Katyrin. Mlekara Sabac will start building the factory in Moscow Oblast next year. Soft cheese and yogurt made with top-quality Russian milk will be produced there in line with the International Food Standard (IFS) for the Russian and foreign markets, the PKS announced. “CCI RF will support the construction of the Mlekara Sabac factory and projects of other Serbian companies that want to expand their operations and have a good position in the Russian market,” Katyrin stated. Cadez urged Katyrin to visit Serbia with a delegation of Russian businesspeople and hold direct talks with representatives of the Serbian business community to discuss potential cooperation.

Serbian biscuit “Plazma” to double production

Bambi’s new €12 million plant in Pozarevac, where Plazma biscuits will be made, will start working in September this year, allowing the production of the popular biscuit to be nearly doubled, announced Bambi General Manager Mr. Stajkovic.

“Last year, we exceeded 30.000 tons of finished products, with Plazma accounting for 22.000 tons. The new production line will have a capacity of 15.000 tons a year, nearly doubling our Plazma production,” Stajkovic noted. He also announced the construction of a new development center, enabling the top-quality training of secondary school students, university students, and interns.

President of the Serbian Chamber of Commerce, Mr. Cadez pointed out that in 2020, a year marked by the coronavirus pandemic, Bambi had reported a 15% rise in exports. “It’s a fantastic thing when you come to a company that, in a year that was not easy at all, managed to increase exports by 15 percent. It is fantastic when you come to a company, a leader in both Serbia and the region and see that it is slowly growing into a world leader as part of the Coca-Cola Hellenic Group,”. He added that the company’s products would soon be available in Coca-Cola cafés around the world. He said that a new facility and production line for “plasma” biscuits would be built within the company’s factory, and that it would cost more than 12 million euros. He added it was “the largest investment of the Coca-Cola Hellenic Group ever, and this ‘Bambi’s tenth production plant will be operational in September.” Coca-Cola Hellenic Group enabled “Bambi” to grow from a regional to a worldwide leader. The company has 800 employees in Pozarevac and Belgrade and is part of Coca-Cola HBC. Readomre about confectionary industry in Serbia in our article over here.

Forest in Serbia
©Milica Spasojevic
A forest in Grivska, Serbia. This year, Serbia produced 143 thousand m3 of timber, more than 30 thousand more than in 2020.

NESTLÉ Serbia reports 28.8% rise in sales in Q1 2021

Nestlé Serbia recorded a sales growth of nearly 5% in 2020, and in Q1, 2021, that growth was 28.5% y-o-y, announced the company. At a presentation of the company’s business results, Country Manager of Nestlé Adriatic Hub South Mrs. Davidovic said Nestle produced over 250 products locally in Serbia and exported them to more than 30 countries. “Instant coffee is a leading product in the Serbian market with a share of over 66%. Food products are also prominent, with almost the entire range of products made in Serbia,” Davidovic pointed out. The company’s Business Executive Director (BEO) Food Renata Matusinovic noted that over 50% of raw materials used in the Surcin-based factory came from local sources. “That drives our obligation to take care of our suppliers,” Matusinovic said. According to her, the company is very dedicated to sustainability and environmental protection. For example, the production process has saved 24,000 m3 of water, and the use of plastic has declined by 50 tons by reducing the dimensions of packaging.

Apple exports to Russia jeopardized by the competition from Iran

Serbian apple growers, who sell their fruit mostly in Russia, need to implement state-of-the-art technologies and switch up the offer to keep up with competitors from Iran, who have been conquering the Russian market since last year, explained professor at the Faculty of Agriculture in Novi Sad Mr. Keserovic. As he told the Beta news agency, Iran produces around 1.7 million tons of apples per year; this year in Serbia, a third of that amount was left unsold in cold storages because farmers refused to sell apples at a price of cca €0.38 per kg. “Because of major competition, not only has the apple price not increased, but it has dropped to €0.29 per kg, so they remain unsold,” explained the professor. According to him, apple orchards are quickly becoming more numerous around the world. In the Caucasus region, they plant apples on plantations of 1.500 hectares every year. If Serbian apple growers want to continue with that activity, they need to implement the latest technologies and change the offer in favor of early-ripening apples and red varieties, raise the standards until they reach top quality, as well as seek new markets.

Imports are not favored by local growers

Imports are putting not only Serbian livestock farmers and brandy makers in a difficult situation, but also, as the current situation shows, tomato growers. As the ripening of the primary tomatoes was delayed this year due to the cold spring, while buyers were looking for red berry vegetables, traders resorted to imports. As a result, tomatoes imported from Greece, which has a warmer coastal climate than south of Serbia, have been knocking down domestic prices. As a result, despite the increase in their production costs, Serbian producers are forced to offer their own produce at lower prices. A kilo of tomatoes currently costs €1.7 in Serbia. The situation was similar with early yields of strawberries. When the domestic strawberries appeared on the market weeks ago, the price was €6.8 per kg. This was seen by traders as an “insult” and they immediately resorted to imports, causing the price to fall below €1.7/kg overnight.

Of course, this is good for Serbian consumers, they can now buy berries per kilogram basis - but it is a question of what will happen to Serbian producers of strawberries. Because in recent years, many of them have already taken a wand in their hands. According to the latest news, the same thing happened with the cherries, which cost three times as much as the most expensive strawberries. As soon as the first cherries grown in Serbia appeared on the market, eye-catching traders arranged to bring Chilean cherries into the country from 12.5 thousand kilometers away and crush the domestic price with it. Maybe consumers should follow the advice to consume all fruits and vegetables at their ripening time in Serbia. In this way, one doesn’t burden its wallet and help domestic producers at the same time.

Damage in state-owned forests

Because of damages in state-owned forests, the volume of felled timber in Serbia came at 143.000 m3, up by some 30.000 m3 y-o-y, the Statistical Office of the Republic of Serbia announced. More than half of it (75.300 m3) was due to natural causes, followed by plant diseases and human-caused damage. The number is the highest when it comes to Sumadija and Western Serbia Region, where the felled timber volume reached 80.500 m3, up by 30.000 m3 from 2019. Half of it resulted from natural inclemencies, followed by plant diseases and damage caused by insects. Last year, there were 26 fires causing damage to state-owned and private forests. Also, illegal logging activities resulted in the loss of 24.500 m3 of timber, 14.100 m3 of which was fire-wood. Illegal logging was the most pronounced in the Southern and Eastern Serbia Region (20.000 m3).

Factories from the EU moving from Asia to the Balkans 

Western Balkan economies might have great benefit from the trend of returning the production of multinational companies from Asia to Europe, according to the study “Potential of the Western Balkans for Attracting Foreign Investments in the Post-Covid Period,” done by the WB Chamber Investment Forum in cooperation with the Vienna Institute for International Economic Studies. In order to use that chance, the study says, investments in educating the qualified personnel, developing infrastructure and an encouraging economic atmosphere that will make the Western Balkan more competitive are needed. “We should use the chance to attract new investments in the post-Covid period,” says WB6 CIF secretary general Tatjana Sterjova-Dushkovska. She added that the goal of the study was to present the advantages of the region and point to the areas that needed additional resources to make WB economies as attractive as possible to domestic and foreign investors. The full study is available here.