Serbia Newsflash, Week 29, 2022

Change in regulation of capped price of pork meat

On July 14, the Serbian Government amended the decision on capping the prices of pork and limiting the margin of sales of chicken meat. This decision will make it possible to lower the retail price of pig’s shoulder by €1.47/kg, pig’s neck by €1.85/kg, and loin by €1.27/kg, while simultaneously making it possible to level the price of pig’s leg.

The Government of Serbia has also decided to limit the margin of selling chicken meat to a maximum of 10%. At the same session, the Government has decided to extend the temporary export ban on Euro Diesel EN 590 for another 14 days, with the goal of preventing shortages of this petroleum product caused by global market disturbances.

Free export of cereals approved

After a meeting with representatives of the Initiative for the Survival of Farmers of Serbia on July 19, Minister of Agriculture Branislav Nedimovic announced on July 21 that the Serbian Government will allow the free export of cereals. “Minister Nedimovic said that the ban on the export of wheat, corn, sunflower, and edible oil would be lifted until September, and after that, the situation on the market would be re-considered,” said Radoslav Adamovic representative of the farmer’s initiative. The Minister added that the farmers had several requests like the increase of milk premium to €0.12/l, the abolition of fuel excise duties for 100 liters of diesel per hectare, the request for direct payment of €300 per hectare and also demanded that the state subsidize part of the price of mineral fertilizer. Solutions to those requests will have to be postponed until a new Government is formed.

Wheat yield 30% lower due to drought

The wheat harvest in Serbia is about to be completed, and the yields are about 30% lower than expected due to the drought. The Minister of Agriculture stated for the Tanjug news agency that a total yield is around €3.2 million tons and that is twice as much as Serbia needs.  A field crop expert, Mr. Miroslav Malsevic said that yields are at the level of the ten-year average of around 4.5 tons/ha. Mr. Malsevic stated  for the Beta news agency that there were lands where precipitation was very low and the yield at those locations ranged from 2.5 to 3.5 tons per hectare, while in the South Banat and Srem regions, the yield went up to 8.5 tons/ha and that "those yields will improve the average in Serbia".

The President of the Farmers’ Associations of Banat, Mr. Dragan Kleut, said that producers were not making any profit this year either, despite increased wheat prices, because the production costs had multiplied. Mr. Kleut said that only few farmers whose yield was five tons per hectare could earn slightly more than they had invested – some €255/ha – and only if they sold their wheat for €0.3 per kilogram.

Two thirds of wheat for commodity reserves secured

So far, 90 thousand tons of wheat have been registered for sale to the state commodity reserves, and there is now room for less than 30 thousand tons, Ms. Ana Jaksic from the Commodity Exchange in Novi Sad stated for the Tanjug news agency.

Among those who applied to sell wheat to the state for €0.34/kg including VAT, the majority are individual producers. “That price seems acceptable. Commodity reserves will pay within 15 days upon the delivery of the wheat,” Ms. Jaksic said, adding that individual agricultural producers have priority in state purchases and reminded that the minimum they can put up for sales to the state is 10 tons.

Although the harvest started with larger transitional stocks than in previous years, there is room for storage. “In general, warehouses have capacity for the storage of new crop. For the sake of avoiding infection, I hope that they will not mix wheat from this year and the previous one,” Ms. Jaksic said.  

Ms. Jaksic pointed out that it is difficult to predict the further movement of wheat prices. “It can be expected that in the upcoming period the price will be high,” Ms. Jaksic commented, stating that for now there are no major requests from the region for the import of wheat from Serbia, even though the region is traditionally dependent on wheat import. “It is expected that there will be more interest from August onwards because the countries of the region are the biggest importers of Serbian wheat and flour.”

Impact of possible agreement between Russia and Ukraine on grain export from Serbia

Mr. Branislav Nedimovic, Serbian Minister of Agriculture explained that the agreement between Russia and Ukraine on the export of wheat, corn, sunflower and sunflower oil via the Black Sea could bring into question the export of these goods from Serbia since buyers of Serbian agricultural products from the surrounding countries could be flooded with cheap goods.

“Buyers in Italy, Albania and Germany, which import wheat and corn from Serbia, can turn to the other side because currently, wheat in Ukraine, loaded on a ship, is sold for $160/ton. With transport services, it is cheaper by €0.04-0.05/kg than wheat from Serbia,” said the minister to TV Pink. Mr. Nedimovic added that logistics is also a problem. Navigation has been suspended in one part of the River Danube due to the low water levels in the territory of Romania. Additionally, a lack of riverboats has been noticed since all kinds of goods are transported on this route. According to the minister, Ukraine has withdrawn its barges from the Danube, and 80% of domestic export was done using those vessels.

Mr. Nedimovic said that he is afraid of what will happen when the corn and sunflower harvest time comes in Serbia, and how much these crops will be worth. “We had a surplus of those goods, and the question is what will happen to it? If our goods are too expensive, who will buy them? And if a buyer is found, who will transport them? One cannot transport as much via freight train and trucks as via ships,” explained the Minister of Agriculture.

Three times as much wheat exported in May 2022 than last year, states minister

The Minister of Agriculture, Branislav Nedimovic, stated that three times as much wheat was exported in May 2022 than in the same month last year when there were no bans and quotas. "Last year in May, 61 thousand tons of wheat were exported, this year 176 thousand tons, which is three times as much. The quota was 220 thousand, and eighty percent of it was fulfilled," said the Minister for TV Prva.

Mr. Nedimovic added that 36 thousand tons of wheat were exported in June last year when there were no control mechanisms for exports, and this year the exported quantities were 88 thousand tons, which is two and a half times as much as the figure from last June. According to the minister, had the ban and quotas for corn export not been introduced, livestock farmers, especially dairy farmers, would not have had anything to feed their livestock with. Mr. Nedimovic also stated that farmers with an average wheat yield of five 5 t/ha can earn up to €700 if the price is €0.3/kg. Last year, added the minister, they were satisfied with earnings of €300 to €400 per hectare. Currently, according to Mr. Nedimovic, old wheat  stocks from Ukraine are sold for €160/t, and in Serbia for €290.

The minister added that before the harvest in May, wheat could be traded for €0.35 -€0.37/kg, and now the price is €0.3 EUR during the harvest. "The state came out with a purchase price of 0.34 EUR/kg for purchase of wheat for commodity reserves, however, 60 percent of requests quantities of planned 131.000 tons arrived," said the Minister.

Drought to harm corn yields

Due to the drought corn crop conditions are very bad and corn producers in Serbia are worried about a repeat of the 2017 situation when the average corn yield was around three tons per hectare.

The President of the Stig Farmers’ Association, Mr. Nedeljko Savic, told the Beta news agency that judging by how undeveloped corn stalks currently are, the yield will be the same as five years ago, when he had 1.5-2 t/ha on his farm. How little that is can be illustrated by the fact that in 2020, the average harvest yield was 10.5 t/ha.

Mr. Savic pointed out that the sowing of corn costs around €1.000 for a hectare and that with this year's yields, most producers will not be able to cover the costs. The President of the Independent Association of Serbian Farmers, Mr. Jovica Jaksic, said that corn in Banat is looking bad and that if the dry period continues, yields will reach a new all-time low.

According to Mr. Jaksic, it rained twice in Banat in the last two months, once the precipitation was 5 l/m² and the other time 15 l/m², which is negligible. Corn yields this year, Mr. Jaksic added, will be around two tons in the most fertile land, and for the sake of comparison, record yields are between 14 to 16 tons per hectare.

Drought will devastate potato crop, price to go up by 30-40% next year

The drought will decimate the potato crop in Serbia this year, and in 2023, the price will be at least 30%-40% more expensive, as is the case with the price of fertilizer, seeds, protective chemicals and fuel, said Mr. Ratko Vukicevic, the Director of AgroMobil, potato production company from Guca.

“The potato crop will be significantly reduced because the drought came in the most sensitive phase of vegetable growth,” said Vukicevic, adding that the yields will be good only on plots in Vojvodina that were sown with early varieties and where crops were irrigated, which is only 3-4% of the total area under those vegetables. Potatoes in the rest of Serbia, according to him, are mostly grown in the western hilly part of the country,  and it is not possible to provide irrigation systems.

Another threat to domestic production would be uncontrolled import. Last year, as Vukicevic said, 40 thousand tons of potatoes were imported into Serbia, mostly from France, Belgium, and other countries.

Dire increase in food prices  

Potatoes in Serbia were 208.3% more expensive in May this year than a year ago, announced the Statistical Office of the Republic of Serbia (RZS). The prices of agricultural and fishery products in May increased by 30.4% compared to the same month in 2021.

Looking at the main product groups, the biggest impact on price growth was recorded in grain (38.1%) and livestock and poultry (35.8%), the RZS announced. The price of wheat is higher by 65.1%, corn by 31.3%, while milk and eggs are more expensive by a little more than 28%.

The prices of agricultural and fishery products in the period January-May this year, compared to the same period in 2021, increased by 20.7% on average. The May prices of these products increased by 3.3%  compared to April, and the highest growth was recorded for grain, which rose in price by 4.9%.

Serbia could substitute imported natural gas with biogas

Serbia can produce more than 3 billion cubic meters of green methane by processing crop residues, organic municipal waste and sludge from wastewater treatment plants and consequently replace the entire import of natural gas. This was stated at the round table How to Ensure Serbia's Gas Independence, organized by the company Wabio Investment Holding SR and the Energija Balkana portal.

The director of the company, Dusko Boskovic, said that Serbia has enough resources in agriculture in the form of field crop residues, which, with the help of the processing technology his company is providing, can bring energy security and serious earnings to the country.

“If we take into account that there are about 2.5 million hectares of arable land in Serbia and if we know that there are about four tons of harvest residue per hectare, we have about 10 million tons of residue every year, which is a very serious resource,” Mr. Boskovic stated. “With the Wabio technology, we can turn it into three billion cubic meters of green methane, which is exactly the amount Serbia is now importing from Russia,” the director if the company added.

Mr. Boskovic also noted that the production price of green methane is around €250 for 1.000 m3. The processing of harvest residues produces digestate as a by-product, which can completely replace mineral fertilizers. “All this can significantly increase the profit of Serbian agriculture by about $250 million,” highlighted Mr. Boskovic, adding that with the estimated production of 7 million tons of digestate per year, that revenue increases by another €2 billion.

New science programs launched

The Science Fund of the Republic of Serbia promoted two new programs through which new scientific and research projects in the Republic of Serbia will be financed.

The Green Program of Science and Business Cooperation will support researchers in conducting applied research that will contribute to the reduction of environmental pollution. This program is in line with the European Union's Road to a Healthy Planet strategy, as well as with relevant national science and technology development strategies.

The budget of the PRIZMA program is €25 million. The funds were provided from the budget of the Republic of Serbia, IPA funds of the European Union and through the SAIGE project of the World Bank. Emanuele Giaufret, Ambassador and Head of the Delegation of the European Union to Serbia, pointed out that investing in science and research in Serbia is not an expense, but an investment, which will not only benefit the scientific community, but also the whole of society, both domestically and at the European level.

BIO4 CAMPUS project presented 

The preliminary design for BIO4 Campus, worth around €190 million in construction and around €100 million equipment costs, was presented at the Government of Serbia last week.

BIO4 Campus is a new bioeconomic camp in Europe, which encompasses four fields: biomedicine, biotechnology, bioinformatics and biodiversity. This space will cover around twenty hectares of land and encompass education, science and research institutions, i.e., three faculties and eight science institutes.

The campus will have a total area of 110.000 m2, around 1.200 professors and researchers and around 4.000 students. Construction is expected to start the first half of 2023, and the works should be finished in the first half of 2025. The institutions covered by this campus are the Faculty of Biology, Faculty of Pharmacy and the bioengineering group of the Faculty of Technology and Metallurgy.

“I am convinced that this will have an additional impact and further strengthen the economy, raise the average salary and pension and help keep young people in Serbia, while also drawing many to move to Serbia in order to work on the most challenging projects in biotechnology, which is no doubt the future,” the Prime Minister of Serbia, Ana Brnabic, said at the presentation of the campus. Prime Minister Brnabic reminded that since 2017, four science and technology parks, several startup centers and a data storage center have been opened in Serbia.