Serbia Newsflash Week 1, 2021

Duty-free export of fruits and veggies to the EU for another five years

Fruit and vegetable producers and exporters from Serbia and other Western Balkan countries will continue to sell their goods to the EU customers duty-free in the next five years. In addition to apples, plums, and sweet corn, the Western Balkans will be able to export potatoes, zucchini, mushrooms, grapes, apricots, cherries, sour cherries, nectarines, peaches, strawberries, nuts, melons, and various citrus fruits duty-free. The EU’s decision on the Autonomous Trade Measures (ATM), renewed every five years, was adopted by the European Parliament and ratified by the Council of the EU at the proposal of the European Commission. It was published in the Official Journal of the EU, and it came into force on Dec 22,2020. According to the decision, the current trade benefits for the export of products not covered by the Stabilization and Association Agreement (SAA) and those for which the SAA stipulations are less favorable will be in effect until the end of 2025. The measures provide valuable support to the regional economy beyond the bilateral free trade agreements with the Western Balkans. The measures represent nearly €24 million in duties saved and will be particularly helpful for smaller farmers. According to the ATM, the possibility of exporting an additional 30 thousand hectoliters of wine a year is extended for wine producers in the region once the quotas that the EU has approved for each Western Balkan country individually are used up.

27 procedures for businesses digitalized

Following the introduction of new electronic services on the E-Government portal, through the E-Paper programme, the first 27 fully digitalized services for issuance of permits, licenses and consents have become available to Serbian businesses. The digitalized procedures include, among others, entry into the registry of distributors and importers of plant nutrition agents, approval of plant protection agent registration, entry into the registry of producers of seeds, seedlings and mycelia of edible and medicinal mushrooms, as well as into the registry of producers of plant nutrition agents and soil conditioners. The procedures are much quicker and cheaper now, representatives of the Office for eGovernment, the Secretariat for Public Policies and the Administration for Plant Protection said at the press conference.

Decree on agro subsidies adopted

On December 29, 2020, the Serbian government adopted a decree on agricultural subsidies worth around €470 million that are disbursed in 2021. The Minister of Agriculture explained that in addition to the existing subsidy models, new ones will be introduced. “The Ministry will offer support to additional sectors such as wine-making and viticulture.” There will be competitions for agro-tourism and distilleries as well. He said that a call for encouraging young farmers would be launched in March 2021. Namely, 50% of the funds should be in a form of a grant, 40% a loan, and 10% provided by the farmers themselves. That particularly refers to young agricultural producers in rather undeveloped areas, primarily in terms of purchasing machinery and equipment used in fruit and vegetable growing and cattle farming, Minister explained. According to him, Serbia is currently talking with the European Commission about implementing the IPARD 3 program, mostly aimed at developing rural infrastructure. “The negotiations should end in July, and it is expected the implementation of the program will start in 2022,” the Minister added.

Government put a smile on the faces of Serbian wine-makers

The Serbian government’s 2021-2031 strategy on development of wine-making and vine-growing is putting the smiles back on the faces of everyone in the sector after a difficult year, said the President of the management board of the Serbian Association of Wine-Makers and Vine-Growers. The Serbian government has realised that wine-making and vine-growing can be a major driving force of Serbia’s economic development because of their enormous potential, said the President of Association “The strategy has five objectives: development of the sector with a focus on identity, improvement and expansion of wine-making and land under vineyards, protection and development of the national market as well as improvement of the organisation system of the wine-making sector and enhancement of education in the sector,” he said. Over the next ten years, this should enable an increase of surfaces under vineyards from the present 7.000 ha to 25.000 ha and boost wine production from nearly 30 million litres a year to 100 million litres a year, he said. “Wine-making and vine-growing should become a driving force of development of tourism, rural development and the hospitality industry, and the whole sector should take its rightful position considering Serbia’s agri-environmental and geomorphological characteristics,” he said. More about Serbian wine sector can be found in our article here.

Best Serbian wines in 2020 announced  

According to the wine-dedicated portal Vino, in 2020 the best Serbian red wine is Cabernet Sauvignon Reserve 2017, made by the Sumadija-based Radovanovic winery, whereas the best white wine is Chardonnay Chi 2016, made by Chicahteau, a small winery in the village of Sisatovac (Srem District, Vojvodina) that was also named the best small winery in Serbia. According to a press release, the highest-rated red wine is Princeps Probus 2016, produced by the Deuric winery. It is located on Mt. Fruska Gora and was named the best young winery. The highest-rated white muscadine wine is the Lozovik-based Temet winery’s Tri Morave Rezerva Belo 2016. The winery was named Serbia’s best winery for a second consecutive year. Awards were handed out in terms of 23 categories, according to the judgment of numerous wine experts, wine producers, oenologists, sommeliers, and wine sellers. That includes the best organic wines – Prokupac 2017 Kostic and Valerius 2017 white wine. The elected “wine-related” person of the year is Slavica Todic, Ph.D., the Head of the Viticulture Department at the Faculty of Agriculture in Zemun. The best wine event award went to the Wine Garden, held at the Botanical Garden in Belgrade in September 2020.

Import quantity of wine per importer restricted 

The Serbian Association of Employers (UPS) announced yesterday that it was satisfied with the decision of the Government of Serbia to distribute the quotas for the import of wine from the European Union in line with the preferential rates for 2021, because, according to them, it puts the market in order and enables fair competition. The UPS say that this decision made by the government restricts the quantity of wine that a single importer can import, which was a subject of dispute in the past period (the German retailer Lidl used majority of duty-free quota in 2020, more about this here.) The quotas for the import of wine are set per quarters. In the first three quarters of 2021, a single importer can import a maximum of 15% of the total quarterly quota. The final quarter is exempt from this decision. If a single importer has not reached 15% of the quarterly quota in the previous trimester, the amount is added to the maximum 15% in the next quarter. “We are satisfied that the Government of Serbia has accepted the initiative of the Serbian Association of Employers and reached this decision. It puts order to our wine market and enables fair competition for all participants in the importing activities, regardless of their size,” says the Director of UPS. The total quota for the import of wine from the EU in 2021 is 2.5 million litres and is split into four equal quarterly quotas of 625.000 litres each, the Association states.  

Slower wheat export due to low prices  

Serbian wheat exports have slowed down because wheat owners are waiting for the price on the international market to exceed €0.17/kg, which is approx. the price on the local market, stated the President of the Serbian Grains Association (SGA). As explained to Beta agency, wheat and flour exports have so far reached around 320 thousand tons. Exporting another 900 thousand tons of wheat would be ideal, but it would be good if 700 thousand tons were sold as well. The President of SGA expects wheat exports to pick up the pace in late February and compensate for the previous weaker results. According to him, wheat owners know that the demand for wheat is the highest until the end of March, after which it declines, and deals are made involving the new yield. If wheat is not sold until the new yield comes, wheat owners will face problems because they will not have the storage capacity for the new wheat.

January-November import/export figures

Serbia’s overall foreign trade in January-November 2020 amounted to €36.3 billion, a decline of 3.9% y-o-y, with exports down by 4.4% and imports 3.5%, the Statistical Office of the Republic of Serbia (RZS) announced. The value of exports totaled €15.47 billion and imports €20.82 billion. The deficit came at €5.35 billion, which is a rise of 0.8% y-o-y. The export-import ratio equaled 74.4% as opposed to 75% reported in the same period last year, the RZS said. The EU member states accounted for 61.5% of Serbia’s foreign trade, and the main foreign trade partner was Germany. Serbia exported goods worth €2.0 billion to Germany and imported goods worth €2.8 billion from that country. The second major partner is the CEFTA countries as Serbia’s gained surplus in foreign trade with them came at €1.7 billion (exports worth €2.5 billion and imports €791.2 million). As for November alone, Serbian exports increased by 2.1% y-o-y, reaching €1.6 billion. Imports rose by 5.6% y-o-y to €2.2 billion.

River-cleaning activities to be carried out urgently 

Huge islands of garbage floating on some rivers in the Balkans are causing an environmental emergency and threatening a regional hydropower plan, reports Associated Press. Plastic bottles, rusty barrels and other waste can be seen clogging the Drina River near Visegrad (B&H) and upstream, the Drina’s tributaries in Montenegro, Serbia and Bosnia carried even more debris after swollen waterways spilled over into landfills. The entire water surrounding the dam on Potpec Lake near Priboj (south-west Serbia) and the shore are covered in thousands of cubic metres of trash that the River Lim picked up from several landfills upstream. Experts have evaluated that the Lim picks up about 40.000 m³ of floating waste from five municipalities in Montenegro. And a half of that trash is swallowed by the river forever.

Serbian Environmental Protection Minister said that the floating waste in the Lim and the Drina rivers are burning problem. She called on republic institutions, as well as local self-governments to get involved in solving this issue to the maximum. The Minister said that this is a regional environmental problem and a cooperation with neighbouring states is needed. “It is inadmissible that our rivers are cluttered with waste and we have to fight this together.” The Ministry is working on mapping all illegal landfills that are close to the aforementioned rivers. Considering that the protection of water flows from pollution is in the jurisdiction of the Republic Water Directorate, a body that is a part of the Ministry of Agriculture, Forestry and Water Management, an inter-ministerial coordination is needed. The Minister also added that she would send a call for cooperation to all relevant institutions in the country and the region in order to solve this long-lasting problem of Serbia and neighbouring Montenegro and Bosnia and Herzegovina.  

About three thousand illegal landfills poison arable land in Serbia 21/12

There are between 2.500 and 3.000 illegal landfills in Serbia that dangerously poison arable land and agricultural products, said Mr Vujic from the Centre for Environmental Policy at the Faculty of Political Sciences. He stated for the Beta agency that Serbia is at the first place in Europe in terms of air pollution, but that the situation is no better when it comes to soil and water pollution. "Near each landfill, arable land is seriously contaminated. The land absorbs toxic substances from landfills, especially when it rains, so we get agricultural products from those areas that are not healthy," he explained. He added that the Rio Tionto’s intentions to invest in lithium mine would completely abolish agricultural production in Jadar (western Serbia) and endanger people's lives. In order for Serbia to standardise the field of ecology at the average level with the European Union, 15 billion euros and  “good will" are needed. “Currently, less than 0.3% of the GDP is allocated for environmental protection in Serbia, and in the EU this figure is 2-3% of the GDP. Bulgaria and Romania invested 8-10% of GDP in environmental protection before joining the EU," explained Mr. Vujic. 

Program for the promotion of export in the food and wood industry

The Development Agency of Serbia announced a public invite on Tuesday for participation in the Program of support to companies for the promotion of export in the food and wood industry. Businesses can apply until 23 February 2020. As the Agency announced, for the realization of the program, €1.2 million have been set aside.

Agreement with US International Development Finance Corporation by the end of January 

"An agreement on the financial support to small and medium enterprises in Serbia, worth around  $1.1 billion, will be signed by the end of January with the U.S. International Development Finance Corporation (DFC)," the Serbian Finance Minister stated for the Tanjug agency. He pointed out that he has had a meeting with the Director of the DFC office in Belgrade, and that they have confirmed the plan for the signing of the agreement. "One part of the agreement pertains to direct credits and the help that the DFC will give to small and medium enterprises in Serbia, whereas the other part of the help will go through commercial banks. I expect that they will finish those negotiations during the first quarter and that the agreement will be implemented in the second quarter, whereby the resources from the DFC will start being provided to Serbian companies," the Minister explained. 

The state to help the economy with three minimum wages in 2021 requested

The Director of the Serbian Association of Employers (UPS), Mr Drobnjakovic, proposed at the session of the Presidency of that Association for the state to help small and medium enterprises with three minimum wages for the employees in 2021 and a new postponement of payment of taxes and contributions for six months. He told Beta news agency that, due to the difficult financial situation, which is a consequence of the limited movements caused by the Covid-19 pandemic, plenty of companies with up to ten employees would be shut down or resort to operations within the shadow economy. “Plenty of SMEs would have to either close down or start operating illegally, because they have no other way of paying their obligations. I believe that the state will be able to foresee the potential damage and find a way to once again help the economy,” he said. He added that the old agreements with business partners were either finished or close to being finished and that the making of new business arrangements was difficult. The Director also said that UPS had launched an initiative for hostels and ethno-houses to be equalised with hotels and for pastry shops to be equalised with other bars and restaurants when it comes to the allocation of state aid. 

MERE opens its first store in Serbia

The Russian discount chain Mere opened its first Serbian store in Batajnica (outskirts of Belgrade) on December 25, 2020. According to announcements, prices will be 20-30% lower compared to the current market prices. At least 100 stores with an average square footage of 1,000 m2 should be opened in Serbia. Mere will open stores in Subotica and Krusevac in late January, as well as Kraljevo and Vrsac in early February 2021. Antonela Bijelic Milojica, who works for the company, says that Mere’s arrival means more Russian goods offered in the Serbian market as of January. According to her, the discount chain will focus on cooperation with small Serbian producers. “Serbian producers will get an opportunity to offer their goods through this chain wherever it is present,” Bijelic Milojica pointed out. The company has over 2.000 stores in Russia under the name Svetofor. They are also present in Belarus and Ukraine. In 2015, Mere expanded to European markets, too. It operates in Germany, Poland, and Romania. Next year, it should open stores in the Czech Republic, Italy, Austria, and Spain, as well. It was said earlier that Mere also planned to open stores in Greece.

Serbia to show its seriousness about the reforms and the EU about the new methodology

On the European path in the new year, according to Serbian Minister for the EU Integration, Serbia should demonstrate that it is committed to the fundamental reforms, building the rule of law, economic resilience, good administration and deep interconnection with leading European Union policies grouped in six clusters. The EU, on the other hand, must show that it is serious about the new methodology as an instrument to speed up a credible negotiating process and to support a sincere enlargement policy which will boost the resilience and vitality of the EU, the Minister told EurActiv and BETA agency.