Serbia Sector Selection

8/8/2019 Serbia Sector Selection

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USAID Agribusiness ProjectUSAID Agribusiness Project


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USAID Agribusiness Project

USAID Agribusiness ProjectUSAID Agribusiness Project

5 year project from Sept 28, 2007 Sept 27, 2012 Implementing Partners: DAI, BAH, IRD, Michigan State University Total Value $24 million

Grants: $5,2 million Project Locations:

Belgrade Head officeField offices in Ni, Novi Sad and aak-TBD


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What Do We Want?What Do We Want?

RapidSustained

BroadBased

Economic GrowthEconomic Growth


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MeaningMeaning

ROI - at least 25 to 1

- Sales growth of $600 million

Increasing competitivenessCreating a sound enabling environment

- Policy, market information, serviceproviders


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Global Enabling Environment

National Enabling Environment

Embedde

d

Services

How?Global Markets

National Markets

Export

Input Supply

Processing

Wholesale

Production

Sector Specific

Cross Cutting

Financial

SupportingServiceMarkets


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CriteriaGrowth potential

- Impact on the economy

Broad based development impact

- Reaching a large number of peopleFeasibility

- To get traction and have an impact


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Sustainable Impact: Competitiveness

The opportunity: Domestic and export market growth potential

- Replace imports, compete globally Potential for broad value added impact Potential for increase in productivity (yield/ha, reduced

post harvest losses, cold storage improvement, shelf life etc.)

Significant return on investment

- Best use of project resources


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Broad Based Impact:Broad Based Impact:Development CriteriaDevelopment Criteria

The highest potential to benefit a broad base of thepopulation

A large number of households/employment involved with eachcommodity

Forward/backward linkages

Per capita income increase

On and off-farm jobs growth opportunity


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Rapid Impact: FeasibilityRapid Impact: Feasibility

The selected commodities yield rapid results Interest of producers and other value chain

actors to participate with the project Ability to produce results within project desired

time frame Private sector involvement Potential to deliver successful Ag Business

Services


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Selecting the Sub-sectorsSelecting the Sub-sectors

Supported by hard data for objectivecomparison

Essential elements:Economic growthReturn on investmentBroad outreach

Be flexible during the analysis if not ableto have impact, drop it!


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SELECTED SUB-SECTORSSELECTED SUB-SECTORS

Berry Fruit

Dairy

Herbs, Spices &Mushrooms

Livestock

Tree Fruit

Vegetables


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BerriesBerries



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Berries - OverviewBerries - Overview

> 80,000 farms, 250 cold stores, and 100processing factories

$172 million sales in 2006

- $151 million exports

- $21 million local market sales

Existing varieties suitable only for processing


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MARKETOPPORTUNTIES

PROPOSED ACTIVITIES

1. Export anddomesticdemand forfresh berries

2. Shift fromfrozen bulkexport to

frozen retail

3. Immediateexportopportunitiesfor valueadded products

Lack of new varieties

Lack of modernproduction knowledgeand technology

Lack of standards

Logistics

Packaging

Lack of associations

Lack of marketingknowledge and activities

Lack of management andnegotiations skills

SUPPLY CHAINCONSTRAINTS

Develop projects on growing newvarieties

Assist foreign and local nurseries inSerbiaRe-print and distribute SEDP extension

materials Local and foreign production supportStudy tours of foreign producers and

processors Implementation and education of

standardsAssist development of logistical

companiesPackaging design and innovationSupport existing and new associationsSupport market information servicesAssist Serbian companies to participate

in foreign fairsSales trainingsManagement and negotiations trainingFinance and risk management trainings

BerriesBerries


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Processors Support shift from frozen bulk to frozen retail market Support developing value added products Strengthen Marketing & Market Access Support Intl. Standards Implementation/Certification

Exports increased by$170 million

Local sales increasedby $30 million

120,000 PM of newjobs created

Produceorganizations

Build management and marketing capacity Support implementation of new varieties Support standards implementation

Support Networking & Market Access

Service providers Increase technical capacity Develop new customer based services Develop network with local producers

Policy Becoming Union for Protection of Varieties [UPOV] member

STRATEGY RESULTSTARGET

BerriesBerries


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Dairy ProductsDairy Products


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Tree FruitTree Fruit


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Tree Fruit - OverviewTree Fruit - Overview

Orchards are about 6% of total arable soil(240,000 ha)

150,000 people in fruit production andprocessing [12% of the total agriculturallabor force] 75% farmers have less than 5 ha 5% have more than 10 ha of orchards

Major fruit crops: plums, 52% of all orchards in Serbia apples 18% and sour cherries 11%

Total farm value of fruit production is US$300 million - 16% of total production

Fresh Fruit Export - US$ 21 million in 2006 apples US$ 11 million; stone fruit US$ 9 million; other fruit US$ 1 million

Fresh fruit imports: US$ 4.5 million in 2006

Processed Fruit Export - US$ 80 million in2006 juices [55%] frozen cherries and plums [37%] preserves [5%] dried [3%]


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MARKETOPPORTUNITIES


PROPOSEDACTIVITIES

1.Fresh fruitfor theRussian

market

2.Qualityfresh fruiton lucrativeEU markets

3.Increasegrowth ofprocessedfruitexports

(juices,dried,frozen)

Introduction of advanced technologies in fruit growing andpost-harvest handling

Improved farm management skills through adequate

training programs Provide Serbias fruit growers with the guidelines for tree

fruit production principles and practices and efficient recordkeeping system

Facilitate networking of existing and creation of newproducer organizations

Assist implementation of international food safety standards

and organic certification of farmers and processors; Support domestic production of certified virus-free nursery

plants

Developing domestic production of prunes, and dried fruit Technical assistance for adequate packaging and labeling

Conduct research and sales development studies; Strengthen business linkages and transfer of know-how

through efficient info dissemination, market study tours

Low productivity

Poor quality control

Lack of productvariety

Extension ofgrowing/selling

season

Outdated serviceproviders

Lack of value-addedpackaging

Weak Sales andMarketing Structure



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STRATEGY RESULTSTARGETS

Processors/Packers

Meeting food safety standards for exportDevelop product diversification and packagingTransition bulk exports to retail packaged opportunityImprove fresh produce quality (post harvest handling)Extend selling season of fresh produceImprove marketing capacities and market access

Exports increased by US $66million Increased domestic sales by

US $33 million 44,000 PM of new jobs created

ProducerOrganizations

Implement GLOBALGAP farm standardIntroduce advanced fruit growing techniquesSupport establishment of new producer organizationsImprove management capacity

ServiceProviders

Shift toward market competitiveness advisory servicesSupport regional networking - improve farmers access to

providersSupport advancement of domestic nurseriesIntroduce new varieties - certified virus-free

Policy Redesign subsiding criteria to boost sub-sector developmentLaw on Cooperatives and Associations



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Dairy products - OverviewDairy products - Overview

1.6 billion liters/year

50% through formalchannels

25 large and over 200small/medium dairies

25 largest dairies accountfor 75% of production

US $600 million - Total farmvalue

Main products: Fresh and

UHT milk, yogurts, cheese 99% - Domestic sales

US $6 million of export[CEFTA]

D i d tD i d t


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MARKETOPPORTUNITIES

PROPOSED ACTIVITIES

1. EU QUOTA

2. Milk paid bystricter qualitystandards

3. Meet growingdemand formilk and valueaddedproducts

4. Preferentialtrade

agreementwith Russia &CEFTA tradezone

50% of milk goes throughGray Market. EU Quota will

be based on FormalEconomy

Raw milk quality below EUstandards

Half Milk Supply FromSmall Dairy Farms A PartTime Job (


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Dairy Processors Support end-user productsdevelopment and diversification Support establish of milk development

councilExports increased by $5 million

Local sales increased by $120million

100,000 PM of new jobs created

Service providers Develop a network of serviceproviders Assist in developing New Customer-

oriented Services Support networking & market access

Small & Medium sizedFarmers/POs

Transform small and medium sizedfarmers into viable commercialagribusinesses

Support creation of regional/nationaldairy association

Policy Feed and milk quality control Harmonization of domestic legislation with EU directives

Dairy productsDairy products


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Herbs & Spices, Mushrooms,Herbs & Spices, Mushrooms,Forest FruitForest Fruit

Chamomile, Mint,Yarrow, Thyme, Paprika,Parsley

Porcini, Chanterelle,Truffles, ButtonMushroom

Wild berries, Rose-hip,Juniper

H b & S i M hH b & S i M h


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Herbs & Spices, Mushrooms,Herbs & Spices, Mushrooms,Forest FruitForest Fruit - Overview- Overview

Total value of the sub-sector: $94million (2006)

2006 exports: US $45 million EU and ex YU 38% unprocessed

Number of people involved: 90,000,mostly women, rural poor &

unemployed


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MARKETOPPORTUNITIES


PROPOSEDACTIVITIES

1. Shift toProcessed Herbs

2. Cultivated Herbsand Mushrooms

3. Value-addedprocessedMushrooms &Forest Fruit forexport anddomestic market

4. Organic products

Inadequate handling

Low prices forcollectors Low quotas

Insufficient knowledgeabout processing andmarket needs

Lack of modern

processing equipment Lack of diversified

production Lack of growing/

harvesting equipment

UnderdevelopedSupply Chain

Lack of knowledgeabout organicproduction andcertification

Improve harvesting and storingpractices through training and

technical assistance Support value-added processing Technical assistance to Value Chain

Stakeholders to improve quotasystem

Trade fairs and specializedexhibitions

Strengthen business linkages

Facilitate linkages betweenprocessors and retailers

Facilitate new investments incooperation with the financial sector

Assist service providers/nurseries tointroduce new species and services

Specialized training programs inOrganic production

Herbs & SpicesHerbs & Spices


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Exporters and

Processors

Support end-user product development Strengthen marketing & market access

Support Intl. standards implementation /certification

New Products and ServicesIntroduced

Exports increased by $30M Domestic sales increased by

$25M 10,500PM of New Jobs

Created

10 Supply/Value ChainsStrengthened

Service Providers Develop technical capacity New customer-oriented servicesintroduction/Development

Support networking & market access

Producer Organizations Improve Management & Marketing Capacity Increase commercial growing Assist Good Agricultural & Collection Practice

development & Implementation Support organic food production

Policy Quota System Improvement Market Information System [MIS] Improvement/Extension Relaxation of Import Procedures for Agricultural Inputs

TARGETS STRATEGY RESULTS

Herbs & SpicesHerbs & Spices


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VegetablesVegetables


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Vegetable - OverviewVegetable - Overview

> 10 % of arable land undervegetable production, cca 500.000ha, average farm 3-5 ha

> 30 processors involved 50 % achieved standards [HACCP, Global

Gap]

About 1.8 million tons of freshvegetable production in 2006 (US$500 million)

100,000 tons of processedvegetable exports 2000-2005

Average export value 2000-2005 US $55 million

Main export partners: EU, exYU and, recently Russia



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MARKETOPPORTUNITIES SUPPLY CHAIN CONSTRAINTS PROPOSED ACTIVITIES

1. Extend

marketingseason [ rootcrops andcabbage]

2. Processedvegetables(sweet corn,industrial

pepper, peas,greenbeans)

3. Fresh withhigh profitmargin

(parsley,celery,parsnip,cauliflower,broccoli andwatermelons)

Inadequate product varietyand extension of growing

and selling season Poor quality control andpost harvest management

Low productivity Lack of adequate (cold)

storing facilities

Inadequate extension

services Value added packaging Insufficient use of irrigation

system and modernagriculture equipment

Low level of cooperationbetween farmers

organizations andprocessors/retail chains

Lack of marketingknowledge

Support demonstration plots andtrainings on advanced technologies in

vegetable production, post harvesthandling Develop training programs for new

(cold) storing technologies Develop programs for creation of

network of agribusiness serviceproviders providers

Workshops on packaging andlabeling standards Facilitate provision of loans and new

investments to the producerorganizations in cooperation with thefinancial institutions

Facilitate linkages between the

producers organization and buyers Marketing and sales training Support industry study tours and

trade show participation




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STRATEGY RESULTSTARGETProcessors,Exporters,Packaging centers

Technical assistance for processors and exporters Strengthen Marketing Promotion & Market Access Support Intl. Standards Implementation/Certification Develop linkages with POs to have contracted prod.

according to buyers specificationsLocal sales increased by 25M$

60.000PM of New Jobs createdExports increased by 45M$

Service providers Develop capacity building program for agribusiness serviceproviders using voucher and grants Create regional/national network of agribusiness service

providers

Support Networking & Market Access

ProducerOrganizations

Develop Management & Marketing Capacity Trainings: extension of growing season, post harvest handling

and quality control, organic production, improve demonstrations Develop/Strengthen Long-term Cooperation with buyers Improve domestic certified seed production

Policy Laws on cooperatives and associations Environmental impacts on agriculture Encourage adherence to EU laws and regulations Align Serbian subsidies with EU common agricultural policy


C f


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Cattle - BeefCattle - BeefTransitioning from Existing Dual Purpose Dairy & Beef Cow BusinessesTransitioning from Existing Dual Purpose Dairy & Beef Cow Businesses


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Cattle Beef - OverviewCattle Beef - Overview

In the 1980s, most of Yugoslavias exports came from Serbia and totaled over 20,000 tonsannually, with well over 10,000 tons to the EU and about 10,000 tons to Halal Moslemmarkets

5 EU certified slaughterhouses - Over 100 million Euros in new investments.

During 2005-07, Serbias beef exports amount to about 2,000 tons valued at US $10Million annually of Baby Beef exported mostly to Italy and Greece.

Annual beef production of 85,000 tons valued at US $350 million mostly comes from youngdairy bulls. About 90% of beef is processed, with an ex-factory value of US $700 Million.

About 150,000 dairy & beef farms exist in Serbia, of which 120,000 are small farms in graysector.

All cattle farms must be registered by EU and new GOS laws

Beef processing plants employee about 10,000 persons and beef sector service jobsamount to 5,000

Cattle - BeefCattle - Beef


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MARKETOPPORTUNTIES

PROPOSED ACTIVITIES

1. UnfulfilledExport andDomesticDemand

2. To Export

Baby Beefto EU andRussia.

3. To ExportHalal Beef

to Middle East,Bosnia, andAlbania.

Shortages in Supplychain

International marketaccess

Lack of Technicalknowledge

Poor Access to Creditand RolloverUtilization

Insufficient Farmerrepresentation


Assist export plants ID/register all cattle Use/develop Ag. service providers Trainings in animal husbandry, feeding

and farm management Adopt EU & international Standards Support Veterinarian Extension Services

Work with processors in marketing andsales

Credit facilitation Promote foreign direct investment (FDI)

Market information systems Institutional building Trade policy discussions




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Farmers & Producers

Transition real jobs by moving small graysector farmers into legal registered business

Support farm coops & assns and include small

cattle farmers in associations Increase service providers to EU Levels

100,000 PM of new jobs Domestic sales and exports

increased by US $200 million

Cattle FarmersAssociations

Expand existing beef and dairy cattle assns tocover all cattle in Serbia

Establish a separate beef cattle sector

Abattoirs, Processors

and Exporters

Turn the newly formed Baby Beef processorsassn. into a strong industry group like in EU

countries. Boost EU beef exports to 10,000 tons Regain Halal beef exports to Middle East at10,000 ton average for former Yugoslavia

Start up exports to Russia

Policy Implement EU standards, EU and Halal certification for Serbian slaughter houses ID and track all cattle from farm to consumers via meet processing plants


Li k S i


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Livestock - SwineSqueezing in Swine

S O


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Swine - OverviewSwine - Overview

Pork has the highest per capita consumption rate for meat in Serbia, but is about 30% to40% below EU levels.

In 2006, Serbia produced about 1.7 million head of pigs, yielding 255,000 tons of pork,valued at about US $400 million.

For international trade, Serbia imports and exports less than 5% of its supply of pork.

Pig numbers grew rapidly after the Balkan wars because of high reproduction rates andgrowing consumption based on low priced corn and soybean meals.

About 50,000 swine farms exist in Serbia, of which 45,000 are small farms in gray sector.

All swine farms must be registered by EU and new GOS laws and shift to formal sector.

Pork processing plants employee about 10,000 persons and pork sector service jobs

amount to 7,000.

SwineSwine


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MARKETOPPORTUNTIES

PROPOSED ACTIVITIES

1. Growingdomestic percapita porkconsumptioncreates room forexpansion

2. Export Niche toMontenegro.

3. Exports ofCanned Pork toRussia and

NeighboringBalkan Countrieshave largePotential.

Inconsistent Supply andQuality Issues

Low FarmerRepresentation inNational LivestockAssociations

Lack of Technical

Knowledge.

Low Credit Utilization.

Loan Facilitation isConstrained by Lack ofGOS WHR Law.

Canned Pork plants Not

Yet Certified to Export toRussia or Other Countries


Training farm management and animal husbandry

Market Information Systems (MIS) Price & Marketsituation Information

Support adoption of international Standards

Support Producer Associations

Promote Foreign Direct Investment (FDI)

Credit Facilitation

Serbian Agricultural Ministry & VojvodinaAgricultural Secretariat Work

Support Extension & Veterinarian Services

Work with processors to facilitate access to loans Strengthen and expand service providers

SwineSwine

SwineSwine


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Farmers andproducers

Transition Real Jobs by Moving Small Grey SectorPig Farmers into Legal Registered Business

Support Farm Coops & Assns & Include Small PigProducers in Livestock AssnsBoost service providers to EU Levels

12,000 PM of new jobsDomestic sales and exports increasedby US $40 million

Pig Farmers Assns

Expand Existing Beef and Dairy Cattle Assns toCover All Cattle in Serbia

Establish a national Pork Producers Association

Abattoirs,Processors,

Move Almost 100% of Swine Slaughterhouses intoLegal Formal Businesses Bring Whole Industry Up to EU Standards.

Exporters Boost Processed Pork Exports to 1,000 tonsStart Up Exports to Russia

Policy Implement EU standards and EU certification for Serbian slaughter housesID and track all pigs from farm to consumers via meet processing plants

SwineSwine


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Livestock - Sheep and GoatLivestock - Sheep and Goat

Sheep and GoatsSheep and Goats


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Sheep and GoatsSheep and Goats

OverviewOverview

Serbia exported most of Yugoslavias sheep meat and cheese before 1990s, over 2,000 tons annually,valued at US $5 million. 50% of herd decimated during Yugoslav Wars and sanctions

In 2006, Serbia produced over 20,000 tons of young lamb and old mutton sheep meat valued at US $50million.

About 1.6 million head of sheep are currently raised In Serbia, of which only about 350,000 head are milkingsheep and most go for meat production. Yields of sheep meat and milk are 50% of EU average.

Recent Investments in sheep farms have greatly expanded with electric fencing and imports of betterHeavier meat breeds from the UK and elsewhere in Europe.

Sheep cheese from Pirot branded as Kackavalj was traditionally 80% sheep milk cheese and 20% cowmilk, but now is 80% cow milk and 20% sheep milk because of the lack of sheep milk

In 2006 about 10,000 tons of goat cheese was produced Valued at US $50 Million. Goat cheese production

is rising rapidly as French alpine dairy goat are being Imported and reproduced in large numbers. Roughly 250,000 head of milking goats are raised in Serbia, but most all the young male kid goats are

slaughtered right after birth to save on milk usage, but could be used for raising meat for export toSwitzerland, nearby Halal Moslem, and other markets.

Sheep & GoatSheep & Goat


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MARKETOPPORTUNTIES

PROPOSED ACTIVITIES

1. Unmet domestic andexport demand

2. Market demand forrejuvenated sheepcheese production,

3. Goat Cheese Outputand Branding toAchieve HigherPrices.

4. Young male kid goatexports

Inconsistent Supply andQuality Issues

Lack of TechnicalKnowledge

Low Credit Utilization Low Farmer

Representation Inefficient Low Yields in

Sheep & Goat Farms

Market Access

Small Farms Have LowRate of Use of NewBreeds

Low Public Awareness

of Subsector and Brandsof Sheep & GoatProducts


Processed Goat Cheese Sales & Niche Exports

Improve Wool Clipping and Exports to UK Market

Young Lamb Exports to Greece & Halal Markets Promoting the Kakavalj Pirot Yellow Sheep

Cheese Brand

Promoting Lamb from Zlatibor, Tara, Homolje,

Encourage better sheep genetics

Concentrate on sales of high value young lambmeat and live lambs

Support the introduction of high yielding heavierEU breeds

Promote Foreign Direct Investment (FDI)

Credit Facilitation

Expand producer associations

Leverage funds from Serbian Agricultural Ministryand Vojvodina Agricultural Secretariat

Support Agribusiness Development Services(ABDS)

Market Information Systems (MIS)

pp

Sheep & GoatSheep & Goat


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Farmers and producers Support development of Farm Coops, serviceproviders & Producer Associations

Transfer Small Farmers into Legal Registered

Business

12,000 PM of new jobs Domestic sales and exports

increased by US $100 million

Producer Associations Support Farm Coops, ABDS Producer Assn

Abattoirs & Processors Support a Well Recognized EU Level Sheep andGoat Assn. & tie into ABDS

Exporters Expand Exports of Lamb Meat. Boost Productionof Hall Lamb and Exports to Former Yugoslaviaslevels

Policy Implement EU standards, EU and Halal certification for Serbian slaughter houses ID and track from farm to consumers via meet processing plants

pp


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Cross-cutting ActivitiesCross-cutting Activities

Marketing & export promotion Policy Extension services

Micro finance/loan officerstraining Study/sales missions

Grants- Investment Incentive- Enabling

Youth enterprise- Business plan competition- 4H

Serbia Sector Selection

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