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Contract Number: 169-C-00-11-00102 Contract Number: 169-C-00-11-00102 Project: Sustainable Local Development Project in Serbia Contractor: Chemonics Inc. USAID COR: Mr. Sinisa Cadjo Issuance Date: February, 2015 Document Title: Agriculture Competitiveness Analysis Author: SEEDEV This publication was produced for review by the United States Agency for International Development. It was prepared by Chemonics International Inc. The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. Authors would particularly like to thank the Chemonics Project Team, the staff in all municipalities which took part in this Study, as well as to all workshop and interview participants. Authors are grateful for their time and kindness, for assistance they provided with making arrangements for visits, meetings and workshops, for their professionalism and for selflessly sharing their knowledge and information with the team of authors. Regional Agricultural Competitiveness Analysis of 15 Serbian Municipalities Executive Summary SEEDEV Contents I. Executive summary ..............................................................................................................................3 I.1. Agriculture ....................................................................................................................................3 I.2. Why this Study? .............................................................................................................................3 I.3. Competitiveness .......................................................................................................................... 4 I.4. Methodology ............................................................................................................................... 4 I.5. Expected trends in agriculture ................................................................................................... 6 I.6. Competitiveness of Serbia ......................................................................................................... 12 II. Regional and municipality competitiveness ..................................................................................... 18 II.1. Existing resources ...................................................................................................................... 18 II.2. Sector competitiveness of regions and municipalities ............................................................ 20 III. How to attract investment in agriculture – role of municipalities .............................................. 36 III.1. The role of municipal office in creation of business environment in agriculture .................. 36 III.2. Role of municipal office in attracting investments................................................................... 37 1 Graphs and tables Graph 1: Comparison of resources - agricultural land and the number of farms in municipalities covered by this project, with the rest of municipalities in Serbia. ............................................................................................................................................................. 18 Graph 2: Distribution of farms which own over 30 or 10 ha compared to other regions covered by the project. ..................... 19 Graph 3: Structure of the farmed land in the regions covered by the project ............................................................................. 19 Graph 4: Share, size and trend in grains production .................................................................................................................... 24 Graph 5: Land not under grain in the Subotica and Sombor region compared with Vojvodina and Serbia .............................. 24 Graph 6: Corn competitiveness per region ................................................................................................................................... 24 Graph 7: Graph 89: Number of pigs in the region compared to Vojvodina and Serbia ...............................................................25 Graph 8: Graf 90: Pig number growth trend in the region and in central Serbia compared to Serbia 2002-2012 ......................25 Graph 9: Sunflower production competitiveness for this region. ............................................................................................... 26 Graph 10: Trend, share and sunflower production volume ......................................................................................................... 26 Graph 11: Production share in Serbia and growth trend in relation to own production in the period 2007-2013 ...................... 26 Graph 12: Municipality competitiveness in sunflower production .............................................................................................. 26 Graph 13: Share in the total number of cattle in 2012 and growth trend in the number of cattle compared to Serbia during 2002-2012. ........................................................................................................................................................................................................ 28 Graph 14: Competitiveness according to the number of cattle. .................................................................................................. 28 Graph 15: Share of milk purchase in Serbia and purchase trend in relation to growth in a particular municipality. ................. 28 Graph 16: Municipality competitiveness in milk production ........................................................................................................ 28 Graph 17: Sour cherry production growth trend in the Nis region .............................................................................................. 30 Graph 18: Sour cherry growth trend 2012-2013 ............................................................................................................................. 30 Graph 19 i 20: Cherry production competitiveness of 15 municipalities covered by this project ............................................... 30 Graph 21: Product ranking in Serbia according to production trend ............................................................................................ 31 Graph 22: Product ranking – Subotica compared with Serbia ...................................................................................................... 31 Graph 23: Apple production share and growth trend ...................................................................................................................32 Graph 24: Apple production share in total fruit production .........................................................................................................32 Graph 25: Cattle number growth trend in the region and in central Serbia compared to Serbia 2002-2012 ............................. 33 Graph 26: Municipality competitiveness in cattle production ..................................................................................................... 33 Graph 27: Poultry production trend in relation to Serbia............................................................................................................. 33 Graph 28 : Share in poultry production in Serbia ......................................................................................................................... 33 Graph 29: Pepper share and production trend in 15 analyzed municipalities ............................................................................. 35 Graph 30: Growth trend and share in pepper production in Serbia ............................................................................................ 35 Table 1: Characteristics and Recommendations ........................................................................................................................... 20 2 I. Executive summary I.1. Agriculture During the last few years Serbian society witnessed a small agricultural revolution. In fact – several small revolutions. First of all, food price went up and that automatically gave this occupation a new lease on life – agriculture became a profitable business and land price went up dramatically. The elderly farm holders started selling their land to other local farmers, who borrowed money from banks to buy the land. This resulted in the creation of agriculture loan market and today in Vojvodina 23000 farmers cultivates 80% of the land, while in central Serbia 155000 farmers are cultivating the same, 80%. Secondly, there’s been in change in consumer behavior. Consumers are more concerned with how healthy the food they buy is, and with its quality. Besides, a traditional „middle consumer“ is slowly disappearing, and is being replaced by either a consumer who buys the cheapest or the one who buys the most expensive product. That, in turn, differentiates producers as well – those who focus on competitive prices and those who add value to their products trying to be competitive through high quality. Thirdly, effects of climate change have contributed towards creation of new technologies, i.e. new food production techniques and new products adapted to new circumstances. The first lesson for Serbia is: this could be a big chance for agriculture, but only if newly established circumstances are taken into account. In other words, the chance is there, if Serbia identifies opportunities in this new situation and use them to become more competitive. First in
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