Serbia: New action plan for the regional market, EU subsidy risks, and women in ag leadership

Four retail chains suspected of price-fixing

The Serbian Commission for Protection of Competition (KZK) has initiated proceedings against four retail chains in Serbia on suspicion of colluding to set identical prices for certain products, a practice that undermines market competition. The investigation targets AholdDelhaize Serbia, Mercator -S, Univerexport and DIS, all of which were subject to unannounced inspections. The Commission also conducted a review at “Cenoteka”, a company that provides price information through its app on products from most retailers nationwide. Over several months, KZK monitored the prices of 35 selected products and found that these were identical across the aforementioned retail chains, which collectively hold a market share exceeding 50%. Between April and September of this year, prices for eight staple products (milk, yogurt, oil, flour, sugar, eggs, coffee, and bananas) remained consistently the same or similar across these retailers.

In August, KZK expanded the review to 45 products, adding an additional retailer for comparison. It found that the consumer basket of 45 items showed minimal price variation between the targeted retailers, while the prices were significantly lower at the "control" retailer, despite its less favorable purchasing conditions with suppliers. Based on its analysis, the Commission concluded that the Serbian retail market experienced value growth from April 2023 to March this year, even though sales volume slightly declined. Additionally, the rise in retail prices was almost twice the inflation rate.

Unutilized EU support for agriculture           

Serbia risks losing up to €74 million from the EU's IPARD II program due to delays in utilizing these funds, according to unofficial reports from European Western Balkans. This funding, part of the IPARD II program for 2014-2020, had a total value of €175 million and was available to Serbia until the end of 2024.

Serbia started using the IPARD III program covering 2021-2027, which provides an additional €288 million in EU support. Experts attribute the potential loss to poor participation from farmers, who may hesitate to apply for funding due to the potential loss of national subsidies, as well as administrative capacity issues within the Agrarian Paying Agency, which handles the IPARD program.

Furthermore, the European Commission in its annual country report, has highlighted the need of Serbia to enhance human resource capacity within this administration and address delays in adopting legal regulations impacting the agricultural sector. The European Commission report 2023 indicate that Serbia lost €12.8 million from the IPARD mechanism in 2022, following a loss of €3.7 million in 2021. While failing to utilize the EU support provided for agriculture, the Serbian government is also facing difficulties in implementing national support schemes. Five farmers’ associations announced nationwide protests for November 1, naming the main reason for protest the government’s failure to uphold their end of the agreement on the national subsidy schemes reached last year.

Women lead one-third of Serbian farms

Women head more than 30% of registered agricultural households in Serbia, primarily engaged in organic food production, vegetable and flower cultivation in greenhouses, agricultural processing, beekeeping, and rural tourism. "This number is increasing, and the Ministry of Agriculture supports their economic empowerment through loans with a 1% interest rate," stated Livija Pavicevic, State Secretary at the Ministry of Agriculture. According to Beta news agency, women represent nearly 60% of the family labor force on rural farms, with an even higher proportion of 64% on smaller farms.

Pavicevic emphasized that the Competitive Agriculture Project of Serbia, implemented in cooperation with the World Bank, significantly boosts women's empowerment in rural areas. According to the project reports, one-third of applications in the project's first two public calls were submitted by women, with 482 receiving grants to expand their farms and agricultural production. Within the EU-funded IPARD program, 38% of the 1,136 beneficiaries, or 479 recipients, are women. Nicola Bertolini, Head of Cooperation at the EU Delegation to Serbia, noted that one-third of the EU's budget is dedicated to rural preservation and agriculture. He added that Serbia has been implementing the IPARD program for a decade, providing various forms of support to farmers, with €288 million now available from the EU for agricultural development in Serbia.

Doubled funding for rural home purchases

The Serbian government has increased its budget for grants to purchase rural homes with gardens to €8.1 million for 2024, up from the initial allocation of €4.2 million. The funds provided by the Ministry of Rural Welfare allow for a maximum grant just over €10,000 per property.

Milan Krkobabic, Minister for Rural Welfare, announced that funds have been approved for an additional 209 homes to encourage young couples to return to rural areas, bringing the program's total to 3,309 homes acquired. "Most properties continue to be in Sombor, Backa region of Vojvodina, a region clearly attractive to young families, with 201 families settling there so far," explained the Minister following the latest Commission for Allocating Rural Homes session.

Backo Petrovo Selo remains the most sought-after village, reaching 98 homes allocated through the program after the addition of eight more properties. The Minister noted that southern regions are also active in the program. This year alone, 650 rural homes have welcomed young residents. The minister emphasized that the program will continue, and new families will soon join 66 villages and towns across Serbia.

Action plan for common regional market adopted

Western Balkan leaders have adopted a new Action Plan for the Common Regional Market for the period 2025-2028, setting a roadmap to enhance trade, mobility, and investment within the region, and to facilitate integration with the EU Single Market, the Secretariat of the Central European Free Trade Agreement (CEFTA) announced.

The new four-year plan is structured around six pillars, of which CEFTA will implement three: free movement of goods, free movement of services, and horizontal trade measures. – this CEFTA agreement aims to unlock the region's potential by boosting trade and investment while paving the way for accelerated integration into the EU Single Market.

In addition to trade and market expansion, the Summit addressed urgent challenges related to the Green Agenda and energy connectivity, according to the statement. Leaders of the Berlin Process from the Western Balkans and select European Union member states gathered in Berlin on Monday to mark the tenth anniversary of the Berlin Process and discuss key initiatives to foster economic integration, connectivity, and sustainability in the region. During the Summit, CEFTA agreements were highlighted as groundbreaking achievements that will enable the successful implementation of the current Action Plan for the Common Regional Market. Acting Director of the CEFTA Secretariat, Danijela Gacevic, expressed gratitude to Germany and other participants in the Berlin Process for their support in adopting the CEFTA agreements.

Saudi Arabia provides loan for irrigation projects in Serbia

Serbian Minister of Finance Sinisa Mali and Sultan Abdulrahman Al-Marsad, CEO of the Saudi Fund for Development, signed a loan agreement that secures funding for three major projects: the BIO4 Campus, an irrigation system, and a power transmission line from Pozarevac to Jagodina.

The total loan value amounts to $209 million. Al-Marsad highlighted that $75 million will be allocated for irrigation and the enhancement of agricultural infrastructure across various regions in Serbia. "The second agreement, valued at $65 million, is designated for the construction of the BIO4 Campus, while the third, also valued at $65 million, aims to expand Serbia's energy infrastructure by developing the next phase of the transmission system for Elektromreža Srbije," Al-Marsad said. Minister Mali noted that these projects will be financed at an interest rate of 2.5% in the local currency, although the agreements were concluded in U.S. dollars.