USAID CSS Annual Report 2

ANNUAL REPORT: APRIL 20, 2019–APRIL 19, 2020 SERBIA COMPETITIVENESS SYSTEMS STRENGTHENING (CSS) ACTIVITY

May 20, 2020 This report is made possible by the support of the American People through the United States Agency for Interna- tional Development (USAID). The contents of this report are the sole responsibility of Cardno Emerging Markets USA, Ltd. and do not necessarily reflect the views of USAID or the United States Government.

ANNUAL REPORT: APRIL 20, 2019–APRIL 19, 2020 SERBIA COMPETITIVENESS SYSTEMS STRENGTHENING (CSS) ACTIVITY

Submitted by: Cardno Emerging Markets USA, Ltd.

Submitted to: USAID Serbia

Contract No.: AID-169-C-17-00003 Competitiveness Systems Strengthening Activity

DISCLAIMER The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. Serbia Competetiveness Systems Strengthening (CSS) Activity

Table of Contents ACRONYMS ...... 2 EXECUTIVE SUMMARY ...... 1 ABOUT THE ACTIVITY ...... 3 SUMMARY OF SURVEY RESULTS ...... 3 PROJECT ANALYSIS AND CONCLUSIONS ...... 5 Design and Effectiveness of Activities ...... 5 Objective-specific Performance Indicators ...... 5 Sustainability ...... 6 Conclusion ...... 7 COLLABORATION, LEARNING AND ADAPTATION (CLA) ...... 7 CLA Approach to Project Management ...... 7 CLA Mid-Term Event and Report ...... 7 TECHNICAL ACTIVITIES Y3 ...... 8 Access to Markets ...... 8 Access to Finance ...... 22 Workforce development ...... 28 STRATEGIC COMMUNICATIONS ...... 33 Promotional events ...... 34 International PR activities ...... 36 Svet Hoće Domaće (I2-12) ...... 36 CSS Communication Channels...... 37 ANNEX A: PMP TABLE ...... 1 ANNEX B: PROGRESS AGAINST YEAR 3 WORKPLAN ...... 2 ANNEX C: SUCCESS STORIES ...... 10 ANNEX D: SELF ASSESSMENT ON PROGRESS ...... 13 ANNEX E – KEY FINDINGS OF THE YEAR 3 CLA MID-TERM EVENT ...... 14 ANNEX F – ANNUAL ASSESSMENT METHODOLOGY ...... 17 ANNEX G – ADDITIONAL COMMUNICATION HIGHLIGHTS ...... 21 ATTACHMENT A: ORGANIZATIONAL CHART ...... 24 ATTACHMENT B: CSS GRANTS AND SUBCONTRACTS UPDATE ...... 25 ATTACHMENT C: PRESS CLIPPING ...... 35

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ACRONYMS APSF Association for the Promotion of Serbian Food B2B Business-to-Business BFS Belgrade Food Show BSO Business Support Organization CLA Collaboration, Learning, and Adaptation CSS Competitiveness Systems Strengthening DCA USAID’s Development Credit Authority FDI Foreign Direct Investment FoA Faculty of Agriculture, University of Belgrade FON Faculty of Organizational Sciences, University of Belgrade FP Facilitation Partner F&V Fruits and Vegetables FY Fiscal Year GHP / GMP Good Hygiene Practices / Good Manufacturing Practices GG Global Gap (Quality Standard) HoReCa Hotel/Restaurant/Café ILC Industry Leader Company IQF Individually Quick Frozen IPARD Instrument for Pre-Accession Assistance in Rural Development MENA Middle East and Northern Africa MIS Marketing Intelligence System MoA Ministry of Agriculture, Forestry and Water Management MoE Ministry of Economy NBS National Bank of Serbia NAPP National Association of Serbian Prune Producers PFDH Premium Food Design Hub PKS Chamber of Commerce and Industry (“Privredna komora Srbije”) RAS Serbian Development Agency RF Results Framework SME Small and Medium Enterprise VC Value Chain VCRA Value Chain Readiness Assessment YFI Association Youth for Impact

Annual Report Y2 Page ii Serbia Competetiveness Systems Strengthening (CSS) Activity

Executive Summary This is the third Annual Report for the Competitiveness Systems Strengthening Activity (CSS/Project) market systems development initiative funded by USAID in Serbia. During this reporting year, the Project took important steps towards finalizing models that can bring Serbian SMEs closer to higher value markets, while improving the system in which they operate and producing unique achievements in Serbia’s fruit and vegetables (F&V) sectors. These include: Cooperation with Retail: The DM Incubator (dm drogeriemarkt) has been an important catalyst for encouraging the retail sector in Serbia to support local SMEs. This approach allows for market-driven changes in SMEs as a result of improved network coordination and communication. Most of the 18 companies that went through the DM incubator in 2019 have reported upgrades or improvements in manufacturing and lab equipment, innovations, packaging, and/or operations. Interviewees from DM stated that more than 60 products have been introduced so far through the initiative and that the first- year results are far better than expected. We have also witnessed market replication of this model, Coca Cola HBC Serbia and Roda Market have implemented similar interventions (“We are coming from the South” and “Serbia’s Super”) after the CSS pilot. Supply Chain Consolidation and Quality Improvements: In cooperation with SMEs who are industry leaders, CSS has expanded on successful pilots and is now working on (1) consolidating frozen high- value supply chains around best performing exporters (Sirogojno Co, Van Drunen Farms, Lukowa, Fortis and others), integrating substantial numbers of smallholders and local cold storages into their supply chain, driving down the chain new standards (such as organic) and practices (2) expanding fresh export trade by opening new markets (biggest EU buyers) and developing effective hub-and-spoke models on the ground allowing producers to make necessary technology improvements (Delta Agrar, Brestovik, Pureberry, AgroBel), Loan Guarantees: CSS supported the USAID Serbia DCA initiative to introduce a new guarantee scheme worth approximately $90 million through three selected commercial banks. The loan guarantee scheme is set as a risk-sharing tool between the Bank, on one hand, and USAID including MoA on the other. The purpose is to facilitate access to bank loans through 60% of collateral coverage for food processing SMEs. The entire initiative is supported by CSS’ technical assistance. Knowledge Transfer and Pragmatic Cooperation with Academia: Partnership with the UC Davis Postharvest Technology Center (PTC) and AgroNET has produced a sustainable model of certified courses for Serbian industry, allowing for transfer of best practices and new technologies to smaller firms, while building stronger linkages between private sector and academia/research. Visibility and Brand Image: CSS has been working with the Association for the Promotion of Serbian Food (APSF) to improve the brand image of Serbian food, locally and globally. APSF’s major activity has been organization of the Belgrade Food Show (BFS) for two years in a row (2018 and 2019). CSS also supported Agro Belgrade, a professional trade fair focused on the F&V sector, and facilitated publishing of high profile articles in key global media sources regarding most competitive crops from Ser- bia. Project Visibility: Promotional activities and communication topics now mostly come from partners. They are more active in promotion and approaching the CSS team with new ideas. There is more cross- cutting in activities between partners and stronger market players are reaching the Project as well. This is a direct result of the Project initiatives and promotional efforts in the last two years. Project Partners were promoted and positioned as recognized entities leading certain activities, thus generating greater engagement on their social media channels. This also helped in greater visibility of the Project itself.

COVID 19-CONTEXT COVID-19 created major turbulence in food markets and initial confusion, panic, fear of scarcity and irrational consumer demand. On the demand side consumption of organic and fresh food increased while meat consumption and other higher-value products declined due to loss of income and employment. Online greenmarkets and (convenience) food platforms, coupled with delivery services,

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became a good option for consumers (some e-commerce platforms reporting 10 times the increase in demand). Ways to reduce the risk of shortage were initiated such as- setting up “green lanes”; fresh produce to cross EU borders rapidly, and supporting individual countries with targeted programs. On the supply side: labor shortages and movement restrictions are affecting global production as developed countries are dependent on foreign seasonal labor. Food supply chains are being disrupted and transport blockages are particularly obstructive for fresh food supply chains that may also result in increased levels of food loss and waste. Transport restrictions and quarantine measures were likely to impede farmers’ access to input and output markets, curbing productive capacities and denying a point of sale for produce. Worker safety became a subject of concern in the various production zones. In Serbia, in the fresh F&V segment, retail chains such as Delhaize, LIDL, and METRO increased orders from the local farmers, in order to mitigate risks of short supply from traditional suppliers (e.g. salads, cherry tomatoes from Italy, Spain etc.). Although percentage of food sold online in Serbia is still minor, greenmarkets being closed for several weeks in March/April, made a strong incentive to many Serbian firms/farms, to open FB profiles and websites in order to reach consumers. MoA launched ePijaca (“e-green market”) platform in early April with over a thousand firms and farms registering in just the first couple of weeks. In the mid to long term, Serbian/CEFTA consumers, like the EU, will probably look for healthier foods and F&V. Fresh producers are now receiving more inquiries from the EU than usual, but quality and standards are challenge for some companies. The Serbian Frozen F&V industry also received 30% more inquiries for purchases this year and expects to increase sales in 2020 by about 10% due to higher demand. The Specialty F&V - HoReCa segment in Serbia is in the most difficult position. Loss projections for hotels in Serbia were at 230M EUR from mid-March to end-June (Belgrade hotels - 130 million EUR). As recent surveys in Serbia show, SMEs have been more vulnerable than large firms. The Project began to work remotely starting March 16; all current near-future events, trainings, trips and field visits were cancelled. Work shifted online quickly, CSS directly trained MoA extension units on quality control and mitigation of the COVID 19 crisis and trained exporters on effective supply chain management. CSS communication refocused and fully transferred to online channels. Since March 31, through the online Svet hoće domaće platform, weekly webinars have been organized bringing together representatives of the industry and the government to discuss the effects of COVID-19 on various segments of F&V industry, share their personal experience and advise the webinar participants. 974 people have attended. The Project also produced an Activity Risk Mitigation plan and made adaptation to its Year 4 workplan. logy C

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About the Activity Building on previous investments, successes, and lessons learned from USAID and other donor initiatives in Serbia, USAID’s Competitiveness Systems Strengthening Activity (CSS/Project) is a four-year activity initiated in April 2017. The Project aims to strengthen Serbia’s agriculture processing sector (the sector), while focusing on the growth of sales as the key benchmark for evaluating performance. The Project takes a market system approach and focuses on addressing competitiveness issues that are systemic—rather than particular—thereby testing and proving the collaborative methodologies required to resolve these gaps. While the approach is being tested on a narrow set of value chains (VCs) within the sector – fruits and vegetables (F&V), it should create a “ripple effect” into other sectors, so that the strengthening of Ser- bia’s overall competitiveness system gathers momentum and is self-sustaining. For this reason, the Pro- ject approach to implementation is organized functionally, instead of tied to a specific product or VC, and targets products and VCs with the highest competitiveness potential for Serbia.

Figure 1. CSS Theory of Change

The theory of change rests on working through and strengthening capacities of local partners. The critical assumption is that these local stakeholders will remain actively engaged in implementation – even when project support ends. The TOC assumes that if CSS can strengthen relationships between stakeholders in selected value chains (VCs), supported by effective communication, monitoring, system and capacity building, then CSS will stimulate investment in VC upgrading, elevating the competitiveness of the entire VC, leading to increased sales and replication of the approach in other sectors.

Summary of Survey Results As a part of the CSS Annual Assessment activity, project team completed the Context Analysis and Project Analysis. Assessment Methodology is presented in the Annex F. Context Analysis The agri-food sector in Serbia is more important to the economy than it is in any other European country, contributing 11.7% to gross value added in 2018 and employing 120,000 people formally, or over 600,000 in total (formally and informally) –a fifth of the total employed. Serbian agricultural exports account for 16% of Serbia’s total exports of goods in 2019. Since 2009, agri-food exports have expanded by 1,450 million euros (more than doubled). However, around two-thirds of this expansion has come from just five basic agricultural products: corn, wheat, raspberries, apples, and animal feed, that are characterized by either low value added/short value chains or lack of product/geographic diversification. Average yields per ha of cultivated land are 37% lower than the EU average and the assortment of products is relatively low-value, and/or with low value-added, i.e. short value chains. To increase its value add and value-chain length, Serbia’s agri-food sector needs to transform from a supply-driven to a demand-driven industry, capable of proactive positioning in international markets. Fruit and Vegetables – The Most Competitive Segment of Serbia’s Agri-Food Serbia’s comparative advantage is in the F&V sector because of the geographical position, land production structure and size, and climate conditions. However, the F&V sector is characterized by significant fragmentation and

Annual Report Y3 3 Serbia Competetiveness Systems Strengthening (CSS) Activity small average holdings. SMEs with capacity and business models based on cooperation are needed to address this problem, along with suitable GoS policies. Products: Fruit products are the dominant export category, compromising 80% of exports (620M EUR). Export of frozen products remains the most important segment of F&V, comprising more than 50%. Export of fresh fruit products, mostly apples, apricots, blueberries and strawberries, and fresh vegetable products, cucumbers and peppers contributes almost 40% to F&V export. Both groups of products have shown signs of steady growth in the last years. The remaining share of exports is warm processing, almost evenly distributed between juices (based on apple and sour cherries), canned products (potato, nuts) and dried (apricots, plums with significant production base, and mushrooms). Markets: Serbia’s export trends in 2019 were positive demonstrating that Serbia managed to recover from the 2017 droughts. Russian Federation (180M EUR) is still the single most important export destination, followed by Germany (140M EUR) and other high-developed EU countries (France, Austria, Belgium, and the United Kingdom). Russia is a main destination for the majority of fresh fruit products (apples, apricots, and strawberries), and the EU is a key market for the frozen segment (raspberries, sour cherries), which are more expensive product. The large and, compared to the EU, unsaturated North American market is becoming more and more attractive for Serbian exporters – with an average annual export value of 15 -20M EUR in the last five years. Exports are more diversified for vegetables. A greater portion of export is directed towards CEFTA and neighboring markets, primarily because of the perishability of these products. Still, some crops, like peppers, mushrooms, and cucumbers (gherkins), have potential to be exported to German, Italian and Austrian markets. Opportunity: Positively, global demand for fruits and vegetables has been constantly growing during the last ten years (8% y-o-y). Serbia’s key trade partner, EU15 market, is among the largest and wealth- iest in the world, comprising as much as 40% of world total import of fruits and vegetables, but is well saturated – growing slowly and steadily in the post crisis period (5-6% y-o-y). The opportunity to inte- grate with this market has not been fully utilized, as only 26% of Serbian exports go there. Based on the most comprehensive Fruit Logistica survey so far (7,000 respondents), consumer trends in the EU indicate that fresh fruit and vegetables are becoming central to the success of any retail store. Consumers are increasingly opting for local and healthier – premium, functional or organic foods. They demand such products all-year long and want distinct products that are authentic in terms of their origin. They want more information about the products they are buying, and are becoming more environmentally conscious. Trade within CEFTA could also be increased, with a focus on vegetables/perishables because those products do not travel well. However, the CEFTA market is stagnating, signalizing that purchas- ing power is limited and market size it close to its saturation point. In terms of Russia, imports peaked in 2013 due to political conflict with the EU but since then import demand has been shrinking as Russia introduced import substitution measures in the agriculture sector. Challenges: Serbia still faces structural challenges in its efforts to additionally increase value and competitiveness of its F&V sector. Considering the relatively high level of agricultural production, Serbia still only has a low value add to products and lacks diversification of exports. A key reason is the high fragmentation of sector, and lack of SMEs with capacity to aggregate production and service EU clients, especially in fresh industry. Challenges to developing SMEs are hidden in better networking and coordination: lack of market intelligence and access to information; lack of production quality, quantity and continuity; inadequate support from business service organizations (BSOs) and lack of adequate technical expertise.

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Project Analysis and Conclusions The project aims to strengthen Serbia’s agriculture processing sector (the sector) by focusing on the growth of sales as the key benchmark for evaluating performance. CSS has well recognized and under- stood key challenges of F&V sector and shaped its actions to address key bottlenecks directly and effectively – in order to help firms and other stakeholders to fix market failures. The primary focus of CSS has been on developing market networks that can increase the confidence of Serbian SMEs to identify higher value markets and implement necessary operational changes to take advantage of them (access to market component). This also includes an effort to stimulate demand for growth finance and make finance accessible and borrower friendly (access to finance component). Last, but not least, Pro- ject has made successful first steps toward improving the pipeline of qualified workers to companies needing them (workforce development component).

Design and Effectiveness of Activities Overall Performance Indicator – Growth of Sales Growth of sales has been defined as the key benchmark for evaluating project performance and its overall success. Data was collected and obtained through annual assessment survey, covering 263 companies from the F&V sector. Out of that number, 160 belong to “treatment” group – firms that are the beneficiaries of CSS support; while remaining 103 firms comprises “control” group – firms that did not cooperate with CSS. According to cleaned-up and carefully analyzed sales data, it can be concluded that firms that have received CSS support (treatment group) have moderately to significantly increased their market sales (2019/2017), compared to firms that have not been beneficiaries of support (control group). Median growth in 2019, compared to 2018 (2019/2018), of treatment group firms (97 firms) was higher by 6.6 percentage points (p.p) than the growth achieved by control group firms (48 firms) (6.6% vs 0.0%). If average growth is analyzed, it can be concluded that the growth of CSS-supported firms was higher by 9.4 p.p (17.1% vs 7.7%). The highest discrepancy is recorded when measured by total sector growth and it stands at 14.4 p.p (8.4% vs -5.8%), indicating that the largest firms from treatment group were much more successful in 2019 than large firms from control group, i.e. rest of the sector. As much as 67% of firms from treatment group have increased their sales while only 52% of firms from control group increased their sales in the last two years.

Objective-specific Performance Indicators All interventions are grouped into three specific objectives: Sub-purpose 1: Strengthening business support systems, in order to establish better linkages between key actors and stakeholders in industry, CSS launched a set of targeted interventions with industry service providers and stakeholders, aimed at addressing key issues of market discovery, consolidation, and quality improvements. These pilots included research and academia institutions, traders, technologists, associations, financial consultants and industry leaders with capacity to service other, smaller firms in the market. Indicative results of these interventions are measured through the Networking in- dex1, as defined by AMELP document, which is based on survey data on level (and quality/satisfaction) of cooperation of firms with associations and research institutions, as well as on participation of firms in business, technical, and financial trainings. Networking index in 2019 confirms that businesses have made improvements in cooperation and that business systems have been additionally strengthened, compared to both 2018 and 2017. Networking index for surveyed firms stood at 41 in 2019, compared to 38 in 2018 and baseline level of 34 in 2017.

1 As defined by the AMELP document Networking index (0-100) measures the firms participation in business association (along with their satisfaction and cost benefit of membership), business trainings, technology training and collaboration with research institutions and academia.

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Sub-purpose 2: Enhancement of market competitiveness of selected value chains, in order to improve market position of Serbia’s F&V companies, CSS undertook several promotional activities, which included visits to Trade shows and B2Bs with international buyers. The project also brought B2B focus to Serbia, by organizing a high-profile international food event - Belgrade Food Show (BFS), and spe- cialist F&V trade fair – AgroBelgrade. CSS invested efforts in building specific market linkages focused on establishing product innovation hubs – “Premium Food Design Hubs” and supporting facilitation of export of fruits, vegetables and niche food products to targeted markets – working through traders. Improved market linkages led to changes on the ground. According to the annual survey, Number of private sector firms that have improved management practices or technologies thank to CSS interventions is 180 (vs target for year three of 95), as reported by firms through survey. The majority of companies stated that those improvements were in the area of marketing and sales, while significant portion consider that CSS interventions have contributed to quality improvements (through obtaining standards). Maybe the most direct and concrete indicator of Project’s impact is represented by the Number of business linkages, measured through the number signed and realized contracts, thanks to the CSS interventions and its implementing partners. In total, according to survey, there were 165 signed contracts, signed by 39 firms (vs 111 signed contracts by 28 firms in 2018), majority referring to export contracts. Twenty-four firms were willing to provide financial data on their contracts, with total value of signed and realized contracts of 26.7M EUR. Sub-purpose 3: Resources for Enterprises Growth Mobilized, in order to enable better understanding and easier access to finance for firms, as well as to contribute to establishment of modern channels of financing, CSS has initiated two key activities – financial trainings for SMEs in order to support the DCA credit guarantee, and establishment of DCA credit guarantee line with MoA and two commercial banks (Addiko and ProCredit), in order to stimulate both demand and supply side on financial market. Notable efforts have gone into developing alternative means of financing as well. Companies’ own resources remained source of financing for the great majority of companies, as 88.5% of firms reported relying on it. In addition, more than 50% (52% in 2019) of firms were using traditional banking financing (Percentage of firms using external source of financing). Other means of financing were not so frequent – 10% of firms reported borrowing funds from family and friends, while 8% uses funds provided by buyers, as a sort of value chain financing. Funds provided by investor capital was used by only 1.9% of surveyed. There are no significant changes, compared to previous years (2017 and 2018), nor difference between control and treatment group. There is a paradox when it comes to access to finance. Lack of financing is cited by 45% of firms as one of the key obstacles for entering new market and expanding business. However, almost half of those firms did not even apply for a loan in 2019 (44% of those who cite lack of finance as a key obstacle). Some of firms even reported no need for bank loans as a key and most important reason behind such decision (55% of those that did not apply) – while favorability of interest rates and collateral requirements were not observed as a main reason for not applying. Some firms (39% of those that did not apply) even stated that banks have approached to them and offered a collaboration. Therefore, their answers lead to a conclusion that firms lack money to expand its business, but do not apply for loans, because they consider there is no need for that. Value of investments resulting from the CSS-supported activities recorded for the Year 3 was $14,057,700, making the total value of investments through the CSS-supported activities $14,565,100.

Sustainability CSS has boosted the competitiveness and functioning of Serbia’s F&V value chains in a short term. Interventions have largely succeeded in reaching out and adding value to startups, MSMEs, business associations, industry service providers, and primary producers. Interviews with partners confirmed the presence of some key preconditions and determinants of sustainability in initiatives that CSS has implemented in cooperation with its partners:

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> Building Local Ownership – Activities were shaped jointly by the CSS team and partners who benefited from the knowledge transfer. > Market Orientation –CSS has invested a significant effort to shift Serbia’s traditional and deep-rooted “resource-oriented” paradigm towards a “market-oriented” one. USAID CSS has mainstreamed the market orientation approach throughout its activities, as beneficiaries are selected with market access facilitators so only those that are market ready or could become market ready are selected. > Non-financial Support/Incentives – The majority of CSS’ Partners stated that our expertise, brand image and devotion were the key support channel, stating that funding was not the main reason for collaboration with the Project. For example, Lukowa considers that USAID’s brand dominantly helped them to successfully organize their academy and attract students. AgroNET stated that the key success factor is reflected in the Project’s ability to organize university col- laborations for know-how transfer between UC Davis and the Faculty of Agriculture. > Strengthening Relationships and Communication - Support activities with a goal to build trust and to strengthen links among stakeholders along the value chain, academia or GoS.

Conclusion CSS has met most of its targets– even some that were projected to be met at the end of the four year project cycle, a result of faster than expected market scale up – and the project has applied lessons learned and modified its approach through the collaborating, learning, and adapting (CLA) process. However, it is too early for a firm conclusions on CSS’s broader impact, as most activities started only in 2018 and are still mainly focused on finalizing follow-up initiatives, that are on the successful track – but yet to be fully completed, and potentially replicated through sector and/or scaled-up by the Gov- ernment or business associations. Time is especially important for indicators such as capital investments and adoption of new technologies.

Collaboration, Learning and Adaptation (CLA)

CLA Approach to Project Management The CLA approach has been organically embedded in the operation of the Project from its onset. The interventions conducted with stakeholders in response to baseline diagnostic and designed strategy have been explored to test the project’s theory of change, and in the third year of implementation scaled up, adapted or ended based on results and market feedback. The outbreak of the Covid-19 crisis and decla- ration of the state of emergency in Serbia on 15 March 2020 compelled the team to swiftly shift to telecommuting and adjust the work to new extraordinary circumstances. In a week, the team was fully equipped and operational for the new work regime. New practices were immediately introduced, including the submission of all teams weekly action plans and sharing information through Status of activities report distributed through one point of communication, and on-line meetings on Microsoft Teams and Skype platforms (for internal meetings) and Zoom (for external communication). The work with partners continued on line. The Project reviewed the risk associated to the implementation of activities as per Work Plan, and proposed mitigation measures to alleviate the adverse effects of the crisis. The document was regularly visited and updated, to allow swift adjustment. This all shows that struc- tures build over the last three years based on evaluation, learning, adjusting and adopting principles were sound and can sustain market changes.

CLA Mid-Term Event and Report Two CLA events were held in Year 3. The first one, held on May 20-22, evaluated interventions in Year 2, and collaboration with Project partners. The outcome of this event was to refocus efforts and coordination of activities in Year 3, and prioritize interventions with the highest-promise for success. The second CLA event, held on December 16-18, focused on Y3 results, adaptation and work planning for the final year of the Project. The Project invited main partners to collectively discus the results achieved,

Annual Report Y3 7 Serbia Competetiveness Systems Strengthening (CSS) Activity and to hear ideas and viable solutions that would serve to inform the Project decisions on refining the activities. Summary of main findings at the Year 3 CLA Mid-Term event can be found in Annex E. Some main findings addressed the following: > Focus on sustainability and market replication, strengthen or find new mechanisms to inform public and stakeholders about project models and successes > Fresh berry market segment presents a great growing opportunity as firms are integrating with buyers who can provide demand for other crops as well > Food hubs become a viable business model, institutionalization of support is the next step > Shifting focus of finance support activities towards practical services to SMEs to support DCA

Technical Activities Y3

Access to Markets Annual Highlights

 Continued to work with and support capacity building for Industry Associations including – the National Association of Prune Producers; Serbia Does Apples (SDA), and the Association for the Promotion of Serbian Food (APSF). These efforts have proven successful to increase access to markets for Serbian firms, for example (SDA) helped to double market exports to the EU- 8% in 2019, compared to 4% in 2016. SDA was admitted to two important international bodies: World Apple and Pear Association (WAPA) and Freshfel (the European Fresh Produce Association), bringing Serbian suppliers closer to the EU  To meet EU market requirements and increase production capabilities, Serbian export companies invested approximately $750,000 in implementing new certifications, food safety standards, enhancing production facilities, and acquiring modern packaging machines. These are all signs of significant shifts in fresh berry market system, and replication of project efforts industry wide.  DM Incubator was recognized as providing social and economic value to whole Serbian soci- ety. It was awarded three times: 1) National Social Responsibility Award “Georg Weifert”; 2) Award from Serbian Association of Managers (SAM) for contribution to development of local entrepreneurship and most recently; 3) Special VIRTUS Award, by Trag Foundation (Trag), for the most innovative project – the first retail incubator in Serbia  Sirogojno experts have trained both SMEs (suppliers) and farmers-growers to implement the highest food safety and production standards. For example, they held 31 workshops and trained 815 farmers in good agricultural practices for berry production, food safety procedures and cooperative business models. With a support from CSS, Sirogojno is finalizing the integration of 14 smaller cold storage, after which it is expected that Sirogojno will increase production by 1,000 tons of berry fruits. From these capacity improvements, Sirogojno agreed with Green- yard to make a joint 2-year contract with Tesco UK to deliver 8000t of frozen fruit.  26 smaller cold storages and 1,550+ smallholder producers trained by Industry Leaders in international standards.

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1. Fresh F&V Sector Activities The fresh sector in Serbia has a massive opportunity to grow, as reflected in the successful apple market, and emerging blueberries market. For the sector to improve, new types of firms need to emerge and new varieties need to be introduced. The sector could perform better if firms could organize the currently fragmented production from growers (hub and spoke), while honoring standards of prominent buyers from the EU. This will also gradually allow for introduction of new international varieties into the production system. The project has specific strategies targeting apples, fresh berries, stone fruits, and peppers and cucumbers (gherkins). Each produce has their own unique set of problems and opportunities depending on the number, capacity and size of the industry association, lead firms/traders available and capacity to service the EU market.

Industry Associations (I2-3, I2-4) The project continued to work with key industry association on improving their capacity to: a) Implement modern, yet affordable marketing improvements for entire industries/sectors b) Drive increase in membership as a mean to increase chances of sustainability. c) Utilize available market resources including cooperation with PKS to attend major trade fairs, main- tain relationships with key international partners, and enter into memberships of global associations.

SUCCESS STORY – Serbia Does Apples Association (SDA):

Background: This was started to help fresh apple sector companies diversify export markets as 93% of export value was directed to a single market—Russia. Companies were highly motivated to reach new export destinations such as the EU, UK and Middle East. These regions/countries were previously recognized as having the best potential for Serbian F&V (CSS Marketing Strategy, 2018). The Project directly supported the establishment of the Serbia Does Apples SDA (https://serbiadoesapples.com/) as a professional industry association, which is officially registered and began work in mid-November 2018. The original members were leading Serbian apple producers with the Fruitlogistica, Berlin 2019 highest standards in production, packaging, assortment, and logistics.

Activities: To achieve their ambitious goals SDA employed professional management. Previously, general manager of SDA, Ms. Julka Toskic (“Agrobrand” agency, Belgrade), partnered with the Project to support Serbian fresh apple producers to access the UK market through education in export procedures, standards, marketing and promotional activities. SDA organized 14 trainings for the member companies on the required standards (BRC, Global GAP), marketing skills and exporting procedures. SDA organized an exhibition of its members at the lead industry events (London Produce Show 2018 and 2019, FruitNet Fresh South East Europe Forum in Belgrade 2018 and 2019, Fruit Logistica in Berlin 2019 and 2020, and Asia FruitLogistica in Hong Kong 2019). In August 2019, SDA manager and 2 representatives of Serbian apple producers met representatives of Romania’s key retail chains and fruit importers and visited 5 logistic centers. During 2018 and 2019, SDA, supported by the Project, promoted the Serbian apple industry and its members in relevant international magazines, such as Fruit- Net’s online and printed publications (Eurofruit) and Frutonea. The Project developed the “Serbia Does” industry branding tag which has been fully applied in this activity through the branding of the association, its communication materials, website, trade fair materials, and booth design. Results: (SDA) has helped with diversification with the share of apple exports to the EU market exports of doubling from 2016-2018. Russia’s share has dropped to 85% (from 93 in 2016). SDA’s members have significantly contributed to the growth of the EU market, especially the Hungarian, UK, and Romanian markets – export growth on these three markets was as much as 360% (from $1.4M in 2017 to $6.5M in 2019).

Annual Report Y3 9 Serbia Competetiveness Systems Strengthening (CSS) Activity

Export breakthrough of Serbian fresh apples to United Kingdom and Romania Serbian apples exports to UK to ROMANIA Time period Quantity Value ($US) Quantity Value ($US) Aug 2018 to Aug 2019 2,318,714 kg $US 1.6 Million 346,532 kg $95,000 Aug 2018 to March 2019 1,589,992 kg $US 1.1 Million 261,247 kg $74,600 Aug 2019 to March 2020 3,299,878 kg $US 2.0 Million 5,027,724 kg $2M Sustainability: Member companies are paying regular membership fees that fund most of their activities themselves (e.g. participation in AsiaFruit event in Sep 2019). The association is attracting other lead companies in the sector. In 2019, two big companies were admitted to the Association: “Apple World” from Ridjica (with 300 ha of orchards) and “Vija product” from Celarevo (with 80 ha of orchards). The latter is owned by an American investor who is planning to significantly expand their operation in 2020/2021 (GMA Capital Investment LLC, NJ, USA). According to SDA’s most recent report, several more companies showed interest to join the Association in 2020. SDA created a rulebook for joining the association which is now available on their website (serbiadoesapples.com). Early in 2019, SDA was accepted for membership in both the World Apple and Pear Association (WAPA) and Freshfel (the European Fresh Produce Association), bringing Serbian suppliers closer to the EU. In its final year, the Project will expand SDA’s model to the rest of the fresh F&V industry: promote the industry internationally under the umbrella brand “Serbia Does Fruit” and/or encourage lead fresh berry exporters to meet the required standards and use “Serbia Does Berries”. Serbia was also selected by the WAPA to be the host of their annual, international event – Prognosfruit. The event is postponed for 2021, because of the Covid-19 pandemic.

Capacity building of industry associations: Based on the methodology CSS developed, very similar to that of SDA, the Association of Serbian Prune Producers (NAPP) members will be able to effectively promote the Stanly prune as a unique product in world markets. It is expected that new members, including smaller producers, will join NAPP in Year 4 further building sustainability. CSS also continued to work with Serbia Organica to build capacity, increase visibility and access markets for Serbian organic produce.

Key Results – Industry Associations  Increased export to Italy by 6% in 2019, compared to 2018. A number of contacts made there introduced new buyers and opened new markets for Serbian prune exports. This is direct result of CSS supported visit to a specialized trade fair Tutto Food in Milano, Italy in May 2019 with modern, updated marketing materials.  Improved network linkages with two major EU companies. In July 2019, two major international companies, Derby Ingredients and Whitworts, visited Serbia and discussed possible cooperation with six NAPP members: Agranela, Podgorina voće, Jovanović voće, Promo Pen, Tehno Božići and Monicom. Derby Ingredients included Serbian prunes into their portfolio and the first orders are expected in 2020. They also actively promoted Serbian prunes and dried blueberries by sharing product samples and presenting them to several buyers in Europe.  Increased visibility of Serbia Organica by helping modernize their online presence, social marketing strategy, resulting to increased visibility in 84 countries. The most traffic came from Ger- many, USA, Bosnia and Herzegovina, Montenegro, France, Philippines, Croatia, North Mace- donia, Slovenia and China.

Annual Report Y3 10 Serbia Competetiveness Systems Strengthening (CSS) Activity

 Supported development of a modern, tailor-made database of organic producers in Serbia. The MoA recognized this contribution as a necessary step in facilitating the trade of organic products. MoA also uses the database for strategic planning and support to this sector.  Supported Serbia Organica in outreach campaign towards local consumers about benefits of an organic diet and Serbian organic product offer. Several retail chains, including DM, specialized shops, and Univerexport participated in this campaign. Companies which advertised in catalogues (Sim Natura, We are one, Organic Snack, All Natural Foods, and farm Soksic) report increased in sales by 20%. Serbia Organica has also increased membership by about 10% in 2019.

Industry Lead Companies and Market Integrators (I2-8) The hub and spoke models are critical to increasing competitiveness of the Serbian industry as it addresses issues such as labor availability, rural immigration, youth involvement in the agricultural sector and most importantly a shift from traditional to modern agriculture by a substantial number of growers that operate on smaller farms. This approach by the Serbian firms/industry is key if land holding fragmentation is to be addressed. Close cooperation with institutions such as MoA advisory services, cooperative associations and technology companies is critical in this process. While the frozen industry has been leading efforts with grower-coop business models, the project also saw an opportunity to expand this approach to vegetables and fresh fruit. CSS targets industry leaders to: a) Invest in smaller, high value packs b) Open new market channels, c) Adopt new technologies/standards/certification d) Develop hub-and-spoke (coop) models with small growers. Vegetables:

Success story: RZ Agro

CSS started cooperating with RZ Agro in 2018. The initial engagement was for a business model pilot that relies on growers working on 0.3 hectares of land, allowing them to stay on their farm and be an effective supplier of gherkins, peppers and strawberries. This model completely eliminates the need for seasonal labor as people are able to stay on their farms while being transformed into modern producers. This model proved especially resilient during COVID-19 crisis, when labor movement restrictions caused many traditional exporters and firms to collapse or completely miss season. RZ Agro equips producers with knowledge, planting material and technology, all on credit, effectively producing a value chain financing solution for the unbankable part of the population. Terms are clearly and transparently outlined in signed contracts, with interest rates kept at 0 and input flow to growers is at reduced cost due to economies of scale. This approach

Annual Report Y3 11 Serbia Competetiveness Systems Strengthening (CSS) Activity

led to a strong response from the farming community. This year, RZ Agro with support from CSS, doubled the number of growers in its value chain to 250 in May/June 2019. The export revenue for gherkins alone increased 2.5 times from the previous year. CSS worked with RZ Agro to import a new berry seed variety from Emco Cal based in Chico, California. This new blackberry cultivar, APF190T, will be an addition to the portfolio of products currently grown by RZ Agro farmers. It is distinguished by early ripening, consistently shaped and sized medium-to-large good quality fruit, thornless canes with excellent plant health and primocane-fruiting habit. Since it is an early ripening variety, this should increase the competitiveness for Serbian producers, because it will be on the market earlier. It is currently with the Fruit Research Institute Čačak, until it becomes ready for production and dissemination to farmers. This is a part of a broader effort to deepen cooperation between the American research system and the Serbian industry, and to elevate production technology and competitiveness of small growers to a higher level.

Expansion and Digitalization of Serbian Agriculture: Collaboration with RZ Agro led to a partnership with Delta Agrar, the largest Serbian agricultural firm. Delta Agrar worked to scale up the hub- and-spoke model on a national scale. The goal is to have thirty modern and progressive growers and two cooperatives trained and integrated into Delta Agrar’s supply chain system. Each grower will have over one-hectare greenhouse production with a plan to improve and scale up vegetable production and extend the harvest season. All growers will be integrated into a digital platform that allows traceability of production and participation in world markets. This is an important step forward in technology application in Serbian agriculture. From the Project’s initiative, MoA’s Extension Service shared a list of 115 farmers trained in Global GAP by the state extension advisors. These farmers will be considered by Delta Agrar to enter their supply chain in the upcoming period. Delta Agrar is planning construction of a new and modern distribution center for fresh vegetables and fruits, value of investment $3M. Fresh Berry Segment: The fresh berries segment is on the rise with expansion and popularization of blueberries. The CSS implementation plan was to support the development of a new range of companies that can be connected to the best buyers in Europe, and increase opportunities for producers in Serbia while driving price competition and keeping this sector competitive.

Success Story: Brestovik and Pureberry Exports Brestovik: 48 blueberry cooperants certified in GlobalGAP standards, and a plum, apricot, peach, and 3 cherry cooperants implemented FSSC 22000 and BSCI standards

Blueberries: As a result of the pilot (2018), 42 tons were exported to Bakker (Netherlands). In 2019, they exported approx. 690 tons of retail-ready 150g, 300g and 500g packs of certified, Serbian blueberries to

K buyer/distributors Bakker (Netherlands) and 4.2 tons to Anevo (Germany). Plums: Exported 50.5 tons of plums to Bakker (Czech Republic), 54.8 tons to Greenyard Fresh Hamburg (Ger- BRESTOVI many). 55.3 tons to Greenyard Fresh Etting (Germany); 49.5 tons to Jewels (France); 6.1 tons to Romfruit (Ro- mania); and 1.1 tons to Anevo (Germany). Apricots: 10.3 tons of apricots to Anevo (Germany); 13.6 to Romfruit (Romania).

Pureberry: 32 cooperants, (19 blueberry, 5 apricot, 2 pepper, 1 nectarine, 1 peach, and 4 plum producers) implemented GlobalGap, FSSC 22000 and BSCI standards. Pureberry is planning to significantly increase export of peppers, from $42,000 in 2019 to $300,000 in 2020. It also plans to start exporting cucumbers and stone fruits to Greenyard. Blueberries: Exported over 120 tons of blueberries to Bakker (Netherlands)

PUREBERRY Peppers (red kapya): Exported 4,480 kg of peppers, from a field trial (1ha) to Greenyard (Germany). Pureberry invested in the production of peppers based on this market need.

With blueberries being produced for fresh consumption, investments in modern production technology have increased, and a new ‘breed’ of growers/farmers has emerged who have decided to invest in this highly profitable product. In 2019 export quantities increased three times to 1647 tons compared to when CSS was starting. The Serbian producers exported to 14 markets, Exports to the Netherlands increased four times to 918 tons, and the UK became a new market importing 76 tons of blueberries.

Annual Report Y3 12 Serbia Competetiveness Systems Strengthening (CSS) Activity

Key Results – Industry Lead Companies  Successful CSS pilot led to Brestovik investment in sorting and packaging equipment, which meant that small packs will be exported to the EU. The pilot’s success led to increased interest by Greenyard to engage more companies in distribution and expanding the portfolio of products – clear signs of potential for replicability and scale up.  Pilot scale up with Brestovik, Pureberry, Agro Bel and Dotika who are all engaged to increase their operations with Greenyard and other EU buyers. These firms were supported to open up as many sales opportunities in the EU as possible.  Coordinated with the Netherland’s embassy to organize a four day Soft Fruit Trade Mission in November 2019 that gathered ten Dutch buyers/distributors that visited Serbian companies including the Union of Cooperatives “Naši Voćari” (Arilje) and AgroBel (Kosmaj) – both project partners, as well as Laki (Arilje), Intersad (Rumenka), and family farms Jevtić, Popić, Ra- dovanović, all from the Šabac region.  Organized meeting between AgroBel, and Fruit World, a distribution subsidiary of the Best Fresh Group, a leading company in the Netherlands, was organized. Fruit World recognized the potential of sourcing blueberries from Serbia and is prepared to help partner companies to introduce new varieties of blueberries, as well as other berry fruits. At the beginning of 2020, a Fruit World representative that visited Serbia started to work for Jupiter Group and continued to cooperate with AgroBel.  Facilitated visit from Haygrove, UK company, a leader for tunnel production. Haygrove is interested in partnering with a Serbian distribution and sales company, potentially Agrobel, in order to make its systems readily available to the growers and producers and to enables yields increase, quality improvements, cropping area maximization, harvest period extensions and smoothing production peaks.  Continued to support matchmaking and B2B missions between Serbian berry exporters and leading European buyers. Seven Serbian companies (Sirmium Fruits, AgroBel, Berry4You, Prima Blueberry, Popic Blueberries, De la Tero and Berry Care) have been introduced to EU and UK buyers and potential contracts are expected to be concluded in 2020.

MoA Extension Services (ES): The main role of extension services (ES) is to educate farmers in agricultural production and implementation of advanced technologies. However, Serbian ES and farmers were missing relevant information regarding trends, food safety and quality standards for both local and international markets, which are critical if they are to be integrated in export supply chains managed by ILCs. The Ministry and the Project thus launched ES capacity building efforts targeting GlobalGAP standards. SGS team, a renowned certification agency, held three training sessions for 120 ES advisors to introduce the GlobalGAP quality standard to local producers and growers. The ES advisors also held hands-on training during three field visits to GlobalGAP certified farms (Ivan Veljković’s sour cherry farm in Grudaš, Ilija Bošković’s farm in Šabac and Goran Mladenović’s farm “Zadruga Zelena Bašta” in Saraorci). During the field visits ES advisors had a chance to experience practical implementation of Good Agricultural Practices under real conditions and the certification processes. Further adoption of international standards will lead to greater access for family farms to local and regional retail chains and F&V exporters. The Project is actively networking the ES advisors and selected farms/households with other Project partners and activities. CSS team is creating further network linkages by connecting the advanced F&V farmers from the ES activity with Delta Agrar and Dotika.

Annual Report Y3 13 Serbia Competetiveness Systems Strengthening (CSS) Activity

National Wholesale Market (I1-9) In September 2019, the MoA approached the Project for support with an Initial/Preliminary Study to set up a national and potentially regional wholesale system. The Project, at the request of the GoS and MoA, decided to start the process of preparing the Preliminary study. However, in March 2020, the activity was canceled due to administrative issues caused by the state of emergency in Serbia (see COVID-19 textbox for more details). This intervention however remains very important to Serbia’s overall industry. Delta Agrar activity, with over 3M USD investment in pack center can only partially show the potential that a functioning wholesale market could have

2. Frozen F&V Sector The most competitive segment of the Serbian industry, with the best-developed infrastructure, is facing pressure, mostly price-based, from competitors in Poland, Ukraine, and the region. The Project identi- fied the following as key improvements to further strengthen industry competitiveness: a) Consolidation of Serbian processors around best exporters with access to higher value markets (fin- ished/retail-ready products, private label and organic); b) Diversification into other crops and products (organic).

Industry Associations (I2-3) The Union of Cold Storages is undergoing a key management change. The Project signed a Grant Agreement in January 2020 to build their capacity by identifying professional staff that can improve internal management capacities and set up new funding, promotional and marketing strategies for the members, as well as transfer knowledge to the rest of the industry about the successes of the ILC model. Union management has been strengthened to provide market research information and other relevant data to its members by contracting a professional manager. The Union strives to be visible and easily accessible to other players in the market, both local and international, and as such attracts new members and new business opportunities.

Industry Lead Companies (ILC) as Business Integrators (I2-8) CSS engages with the Industry Lead companies to create access to higher value markets for smaller firms in Serbia. Project partners include industry brand names such as Sirogojno, Lukowa, Fortis and Van Drunen Farms Europe. In total, these four firms trained and included 26 smaller cold storages and 1,550+ smallholder producers in their supply chains, pushing standards such as Global GAP., Certified Organic in farm production, and Good Manufacturing Practice (GMP) and Good Hygiene Practice (GHP) in frozen fruit processing, respectively, and directly impacting the quality and value of the product exported from Serbia. The mid-term evaluation report indicated that this was successful, but that the Project should also include smaller firms from underdeveloped regions in project interventions, so they too can start consolidating their supply chains. In response to this feedback, the Project partnered with with Menex and Frutorga, as well as prepared a set of trainings to other firms aimed at transferring knowledge and know- how on successful cooperative management, market discovery and new standards. The project also utilized the AgroBelgrade Fair to disseminate lessons from these activities industry wide.

Annual Report Y3 14 Serbia Competetiveness Systems Strengthening (CSS) Activity

SUCCESS STORY: CSS Partnership with Industry Leaders

Van Drunen Farms Europe (VDFE): VDFE was selected to enhance the knowledge of food safety practices for raw material suppliers. 14 frozen processors and farmers were educated on how they can enhance their quality and safety standards to meet VDFE’s requirements, in order to be integrated into the company`s supply chain. This directly contributed to the capacity of the overall frozen industry. Five new products were launched in three retail chains for freeze-dried fruit/vegetable healthy snacks. Three contracts were signed with Univerexport, Mercator and Biospajz. In 2019 VDFE sourced 11.13% more raw materials from Serbian companies than in the same period last year. Also, VDFE has increased sales to European/Serbian clients by 38% for the first 8 months of 2019. Total sales for the period Jan-Aug 2019 is $6.3M out of which $2.37M was sold to European/Serbian clients.

Sirogojno: partnered with CSS to address issues of the food safety management system, product standardization and integration of a 800+ berry growers and 14 cold-storages into their value chain. This included three new export agreements for value-added, (i.e. small, retail packaging) frozen fruits. Other results include 31 educational sessions for 815 farmers. As a part of this activity, Sirogojno invested in the new, state-of-the-art private laboratory for food-safety control. Based on the impression of the international buyers who visited the laboratory, the implemented food safety system is matching corresponding systems in the EU.

Fortis: The Project partnered with Fortis from South Serbia to boost export- led growth through organic standard certifications and strengthen competitiveness of Serbian organic fruit producers. During the activity, 169 new members joined group organic standard certification. Due to these new business opportunities, Fortis invested around $400,000 into new equipment and reorganized part of their facility from conventional to organic production. In 2019, Fortis sales of organic products (1,675 tons) more than tripled compared to 2018.

Lukowa (Education for growers): At the beginning of 2019, 600 participants, primary producers of F&V attended 16 workshops and completed Lukowa’s Education for growers program. Lukowa reported the cooperation was established with 110 new vegetable growers and from whom the company pur- chased agriculture products in the amount of $760,000. This training was a part of the Project’s support for consolidation of supply chain in F&V industry. With this activity the Project was particularly targeting inclusion of vegetable producers (e.g. carrots, broccoli, cauliflower etc.) into Lukova’s VC. Lukowa collaborates with the MoA’s extension service and that state agricultural extension agents participated as lecturers in trainings organized by Lukowa. Through sharing best practices and knowledge, the Lukowa team was able to train micro firms and small holders to improve their market access.

Menex: Thanks to partnership with CSS, Menex started to improve and expand their berry growers’ network by adding 100 new farmers in their network, and to be certified with GAP and Organic standards. Menex will improve the process of advisory services, production processes, traceability, and marketing practices through the implementation of a self-developed software system. At least $1M increase in sales is expected. All products sold belong to a high-value market segment, i.e. organic berries, forest fruits in small, retail packs.

Frutorga: Frutorga is aiming to establish a cooperative-contract business model with 15 new berry growers and invest $200,000 in new cold storage and packing equipment, which will enable the firm to enter the fresh berry market. At the same time, Frutorga is planning to increase sales to existing and new buyers by $400,000. Farmers from their network will be supported by required inputs, advisory services and GAP standardization.

Annual Report Y3 15 Serbia Competetiveness Systems Strengthening (CSS) Activity

Agro Belgrade Fair (I1-6) In partnership with the MoA and the City of Belgrade, CSS supported the first International Fruit, Wine and Vegetables Fair in Serbia - Agro Belgrade 2020 that took place January 30-February 1, 2020 at the Belgrade Fair. Agro Belgrade is an integration point for all Project activities in the fresh and frozen industry segment. The event featured more than 35,000 visitors, 500 producers and purchasers of fruits and vegetables, cooperatives, manufacturers of equipment and machinery, seed houses, nurseries, experts in the field of protection and nutrition of plants and inputs for agricultural production. Panels were also held on the current trends and challenges in the field of agricultural production. CSS supported seven panel discussions promoting various topics of interest in agriculture, including F&V production and processing sectors. Leading industry experts discussed the latest trends in the food industry, export opportunities, Serbia’s place in the global market, and food safety and export procedures amongst other topics. CSS contributed to the promotion of the event by raising awareness about agribusinesses, education, workforce and regulatory topics in the F&V sector and agriculture as a whole.

3. Specialty Food and Private Label Sector Based on EU and global specialty growth trends, CSS developed and executed models to help generate and promote food business, youth and woman entrepreneurship, innovations, new food brands, and expand exports and sales. CSS support models provide a good example of leveraging food start-ups and SMEs to improve their competitiveness through better use of food safety, innovations, design, connection with buyers, and access to finance (including bank loans and VC funding opportunities). Key to this approach is not just a spillover effect to other industries e.g. creative industries, packaging or ICT, but also an opportunity for integration with different state support programs (RAS, Ministry of Education, Science and Technological Development, Inno- vation Fund).

R&D and Innovations in Serbian Specialty F&V Sector (I1-5) CSS recognized that the food hub model is a catalyst for innovation, technology transfer and commerciali- zation in start-ups and SMEs. CSS developed Premium Food Design Hubs, a 360-degree assistance program that provides comprehensive support for improving products and firms’ business development. Over the course of two cycles, the activity supported 37 SMEs, helping to develop 76 new premium food products and improve 54 existing food products (total of 130 SKUs). These were placed in domestic and international retail chains. With an average of 150% growth rate, PFDH alumni companies showed better performances in sales and exports of newly developed or improved products, compared to other companies not receiving this type of assistance.

Annual Report Y3 16 Serbia Competetiveness Systems Strengthening (CSS) Activity

CSS partners implementing this program, Desing Taste Centar and BIPs Food Hub are now able to independently continue supporting SMEs and start-ups to develop their innovative, market-ready products. This year, this model proved to be successful and received strong recognition from the rest of the industry. Early results indicate a ‘crowding- in’ effect, as other retailers, private companies, NGOs and government agencies show interest in following suit, as shown in the graphic above. DM replicated the PFDH model with the DM Incubator. The DM Incubator was created as ‘one-stop shop’ for start-ups and SMEs to receive 360-degree support to develop premium products by assisting with food technology, design, financing, branding, marketing and market access. By supporting 18 companies and placing 57 newly created food and beauty segment products, DM succeeded to increase sales of DM Incubator products reaching higher than expected $183,000 with more than 46,000 units sold in less than 8 months from official launch. The successful DM Incubator model, interested LIDL to apply some of its features to their to-be-established hub like model in 2020. CSS model was also recognized by multinational company Coca-Cola, incorporated in their market driven activity "Coming from South Serbia". Thru this activity Coca-Cola assisted 10 food SMEs and start-ups from South Serbia, offering the same type of all-inclusive business and product development support.

SUCCESS STORY: Premium Food Design Hub- Replication

The PFDH has been replicated by other CSS partners, such as ENECA and the Serbian Food Technology Council to support SMEs in development of market-ready food products. ENECA used PFDH features to design the PL Training Center, supporting market access of private label products, while SFTC created a ‘zero-waste’ model to produce new, market ready products that minimize food waste during production. As a result of these activities 15 SMEs and 4 cooperatives received significant support in product development, technology and strengthening of internal production capacities, crucial for their competitiveness in domestic and foreign markets. In the last quarter, the PL initiative resulted in the establishment of the Serbian Private Label Association (SPLA) on March 6, 2020 and the first PL online portal will be available at the of April 2020, presenting an excellent networking opportunity and ‘point-of-entry’ for food SMEs to numerous PL opportunities in the country and abroad. SPLA was formally established with a mandate to promote and increase competitiveness of private label (PL) companies in both domestic and international markets. Founding members of the SPLA include the small and large food producers and a leading domestic retail chain. The event was visited by 60 representatives from the food industry, and included a panel discussion, B2B networking sessions and training for selected producers. During the panel discussion, key industry experts from PKS, Gomex, Yumis and Members of the SPLA Management board Naši Voćari cooperative, emphasized the high potential for PL growth in Serbia, and the importance of ongoing cooperation among private, public and business service organizations (BSO) sectors to incentivize SMEs to expand their offering with new PL products and to penetrate new distribution channels. This was preceded by ENECAs work with ten food producers and one cooperative to develop 23 new PL products to be showcased to potential domestic and foreign companies’ category managers and other buyers and purchasers in April 2019. As a follow-up B2B meetings were organized with three large domestic retail chains (Ahold Delhaize, Gomex and DM) to showcase these newly developed PL products in an effort to negotiate potential placement in these retail stores.

Annual Report Y3 17 Serbia Competetiveness Systems Strengthening (CSS) Activity

CSS supported PL Training Center and ‘zero-waste’ program beneficiaries CSS supported PL Training Center and ‘zero-waste’ program beneficiaries SMEs Cooperatives Polo Čačak, Es Komerc (Prijepolje), Alego Prva složena zadruga "Naši voćari", Arilje Apetisan (Grdelica), Black Grass (Crna Trava), ENECA PL Healthy Food Lazić (Mozgovo), Master Food Training (Užice), Sve domaće MR (Čačak), Nisha (Crna Center Trava), Promo Pen (Čačak), Master Foods (Užice) Natura Gusto (Paraćin), Agro Iris (Šabac), Serbian Food Prva složena zadruga "Naši voćari", (Arilje), Black Grass (Crna Trava), Victoria (Beograd), Technology Profi-agrar 2018 (Slatina), Ženska poljoprivredna Slatka jesen (Požega), Jastrebačka priča (Beo- Council zadruga (Kosjerić), Ariljke (Arilje) grad)

Key Result “Crowding-in” effect in domestic food market

The PFDH model has been replicated numerous times through other market players taking over some of the hub features in development of their business models. All these examples signal a positive market response to the PFDH that was not part of the initial CSS activity planning. Some examples include:  KoVoli Export Food Hub –assisted domestic premium food products to launch on Amazon  Food Scale Hub – achieved $1M export value of premium honey to Scandinavian markets  Cheese Academy – established a unique one-stop-shop for small cheese producers to rede- velop their products and penetrate HoReCa markets.  Support the Cooperative Union of Serbia in implementing hub features and development of a one-stop-shop for their members.  Mainstreamed ides of cooperatives participating in the creation of new business models. In partnership with the Serbian Union of Cooperatives, on November 23, 2019 CSS organized the panel discussion “Modern Cooperatives - How to Create a Successful Business Model” at the 14th Ethnic Food and Drink Fair. The panel, moderated by APSF, included several prominent speakers, Nikola Mihailović, the president of the ZSS, Božo Joković, the Director of the First Serbian Union of Cooperatives “Naši Voćari”, Viktor Nedović, State Secretary in the Ministry of Education, Science and Technological Development, Milivoje Jovanović, Program Director ENECA, and Igor Kojčić, Project Manager at Initiative for Development and Cooperation and founder of Agro Iris.

Sustainable institutional support for the Serbian specialty food industry. CSS is in the process of phasing out support allowing the established models to function on their own. Moreover, sustainability will be secured through refined and adapted PFDH features incorporated in targeted state aid programs. The models will continue to be successful when operating in a system that addresses the needs of early- stage and fast-growing companies to (re)develop products according to market trends, and hence remain competitive in international arena.

Annual Report Y3 18 Serbia Competetiveness Systems Strengthening (CSS) Activity

Premium Food Design Hub Timeline from Y1 to Y4

CROWDING-IN 2nd PFDH cycle completed in cooperation with 2 food hubs – 16 SMEs assisted; PIONEERING AND DEVEL- 44 new, premium food products developed. Dm OPMENT CSS developed Incubator launched, taking over some of the PFDH model; Launch of the PFDH features. first PFDH cycle in cooperation with 4 partners/hubs.

INSTITUTIONAL SUPPORT AND PHASE-OUT achieved growth and replication models that can be expected to continue. Sustainability FIRST MVPs DEVELOPED 20 companies as- through systematic support and inte- sisted, resulting in 86 new, shelf-ready products, gration with state aid programs (RAS, enlisted in domestic retail, increased sales, and MinSci) supporting SMEs, innova- exports. tions, and internationalization.

Export facilitation partners (Traders) Trofej – retail-ready products to CEFTA: Trofej, a regional company with operations in Serbia and North Macedonia, focused their activities to recognize niche, specialty food producers from south and central Serbia and assist them to export. Trofej provided expertise and firsthand experience to selected SMEs to improve their capacity building and expand their reach in the regional FMCG market. Trofej successfully exported the first batches of premium quality, dried fruits to the North Macedonian branch of the German DM retailer. The products were created by the social cooperative “Agro Iris” from Šabac. Trofej team also succeeded to establish connections between North Macedonian retailer Stokomak and Serbian producer of plant-based meat Zivi 100 and exported first quantities of their plant- based meat products to North Macedonia. Previously Trofej team provided a series of hands-on training for six Serbian SMEs/startups and recently audited three more companies/startups to explore possibilities to export their products.

SUCCESS STORY: Ko-Voli – Serbian specialty food access online platforms

KoVoli, one of the Project’s export facilitation partners in the specialty and fine food segment, facilitated negotiations and provided technical support to enlist selected Serbian specialty food products on Amazon. The enlisted products are produced by three specialty food producers in Serbia – Min-Com- merce (Belgrade), Stanišić Bio (Novi Sad) and Real Red Raspberry (Bečej). Over the course of nine months and intensive work on targeted online marketing campaigns, product labelling and visual and brand identity, these three companies managed to fulfill Amazon’s strict rules and procedures for online product placement. A to- Real Red Raspberry, one of the PFDH beneficiaries, tal of ten products, including chilly sauces, profile at Amazon.com, Inc. mushroom spreads and sugar-free raspberry spreads, are now available for purchase by US consumers on Amazon. Moreover, KoVoli was active with facilitating contacts between nine selected private label companies and foreign retail chains. As a result, companies received invitation from some of the leading EU retail chains to fill out their supplier’s data

Annual Report Y3 19 Serbia Competetiveness Systems Strengthening (CSS) Activity

form, while AllBerries company has been invited to be part of b2b event in Paris, organized by Wabel, one of the world’s largest business matchmaking platforms.

AgroCommunications - Serbian high-value food to German markets: AgroCommunications intensively worked with 11 selected producers of high-quality, innovative, healthy/specialty/functional food products to expand their exports to Germany and Austria. CSS supported export facilitating partners achieved contacts with 288 buyers from 153 food outlets located in these two markets. Contact list embraced large retail chains including Rewe, Edeka, Spar, as well as HoReCa outlets and small specialized, bio shops. Samples have been sent to 36 departments of 21 distributors and retail chains, aiming to further expand export possibilities of Serbian premium food products. Negotiations are still ongoing, with the first export results expected in three months.

Industry Associations (I2-3)

Association for Promotion of Serbian Food (APSF)

APSF activities were focused on the final preparations and implementation of the BFS 2019, but also on further capacity building and strengthening of professional Association’s management, organizational structure and annual assessment plan.

APSF organized the BFS 2019 and tailored its key services for Serbian SMEs by providing knowledge about global trends, access to markets, B2B connections, and visibility in domestic and inter- BELGRADE FOOD SHOW 2019 HIGHLIGHTS national markets. This two-day trade fair, included 114 exhibitors from the fruit, vegetable, meat, and panels with leading industry experts discussed the dairy industries included over 20 innovative compa- latest trends in the food industry, Serbian export op- nies with unique products that are part of the Pre- portunities, tasting methodologies, and the im- mium Food Design Hub and the dm Incubator portance of branding for a country’s image. 17 sessions with 67 panelists and lecturers who At the ceremonial opening, Deputy Prime Minister of participated at the conference educational sessions the Republic of Serbia, Zorana Mihajlović and 215 B2B meetings in B2B zone, where food produc- USAID Acting Mission Director, Shanley Pinchotti ers and domestic and foreign buyers discussed fu- addressed a 350-plus person audience. ture cooperation and partnerships The novelty of BFS 2019 program was the first in- 57 foreign and domestic buyers vestment pitching session for companies from the 11 foreign buyers invited through hosted buyer food industry. BFS helped exhibitors identify invest- program, coming from the UK, Netherland, France, ment opportunities and business partnerships. 10 Norway, Czech Republic, Sweden, Montenegro, companies were prepared. Five were selected to USA and Lebanon. participate in a pitching session with nine food and beverage investors with the goal of raising business development funds. As a result of follow up meetings and discussions, two companies started the process of negotiations for equity investment of $220,000 and two companies started the process discussing strategic partnerships for production and distribution of their products valued at $600-800,000.

Annual Report Y3 20 Serbia Competetiveness Systems Strengthening (CSS) Activity

BFS 2018 and 2019 attracted huge media attention and coverage and resulted in $800,000 sales arrangements with more than $1.1M in sales and partnerships expected. All of these confirmed that BFS managed to be positioned as a meeting point between international buyers, retailers, investors and SMEs with high quality products and potential for export.

International Trade Fairs Specialty & Fine Food Fair in London. Nine Serbian specialty food producers exhibited at one of the world’s top-notch trade fairs from September 1-3, 2019. Participating under the brand “Serbia Does Specialty Food”, this was the first-time domestic companies had an organized exhibition in the UK effectively showcasing new, innovative premium products. Since the UK market is the third largest premium food market in the EU, and the fifth largest worldwide, SFFF provided an excellent matchmaking platform for high-quality, specialty food manufacturers to establish contact with potential buyers from the retail, foodservice and wholesale sectors in the UK market. The first-time exhibition of Serbian specialty food producers proved successful, resulting in 12 contracts with foreign buyers from USA and Europe with an estimated value of $951,577. Together with APSF, CSS designed the Serbian stand, promotional brochures, press releases, e-invita- tions and other promotional giveaways that were produced and distributed at the fair. Social media and PR campaign were conducted to promote Serbian premium food producers at the tradeshow. The Brit- ish-Serbian Chamber of Commerce (supported by Serbian Ministry of Foreign Affairs) participated as a partner for this trade event.

Annual Report Y3 21 Serbia Competetiveness Systems Strengthening (CSS) Activity

Fruit Logistica 2020

In cooperation with PKS, CSS promoted F&V companies at Fruit Logistica 2020 trade show, February 5 – 7.The companies exhibited under umbrella brand “Serbia Does Fruit”. Be- side numerous meetings at the national stand, the Project representatives organized and facilitated a series of meetings to link Serbian berry-fruits, vegetables and stone-fruits producers and traders with the renowned European produce distributors and buyers. The Project also sponsored the attendance of the Institute for Science Application in Agriculture’s representative Dr. Slavica Colic, the head institution of the Serbian agricultural extension service. The thirteen companies who were supported by RAS/PKS reported more than 70 contacts from Germany, Poland, Russia, Switzerland, Spain, France, Italy and the Czech Republic with estimated export contracts signed at the event close to 1M EUR.

COVID 19-CONTEXT Most of the A2M activities require interactions between the local Project’s implementing partners (IPs) and international companies, buyers, consultants, and trade events. Because of the numerous bans that have been introduced since the Covid-19, several activities were cancelled or postponed.  In the fresh F&V segment, CSS planned the fresh berry buyers' Trade Mission and a Technol- ogy Mission which have postponed until September 2020. This postponement might have impact on Project partner's targets, e.g. # of contracts, sales.  The Project had to cancel Solicitation for new ILC Business Integrators aiming to scale up the “Hub & Spoke” model. The Project quickly reacted and introduced mitigation actions by developing and launching training modules for SMEs and farmers from the sector to present benefits of the integrated contract farming model that will be conducted by the Project’s own staff and will not require additional funding.  The Project had to remove support for the National Wholesale Market study planned for 2020 due to Covid19 restrictions of travel.  Scale-up of the food hub/incubator in partnership with domestic and international Lidl retail chain was planned to begin in April 2020 and was cancelled because the IP isn’t able to plan any activities until after the crisis. Eneca (the IP) and the recently established Serbian Private Label Association organized successful B2Bs with SMEs that were supposed to have the newly developed products enlisted in domestic retailers. However, retailers are momentary re- luctant to enlist the products, until restrictions are lifted. The activity is extended until October 2020. Similarly, the Serbian Food Technologists Council (the IP) cannot currently work with beneficiary SMEs in the field to finalize their new products due to COVID-19 crisis. The activity is extended until October 2020.n Food Technology C

Access to Finance Annual Highlights

 DCA Loan Guarantee established and emerged as a preferable option for larger investments  CSS contributed to $14.6M in new investments

Annual Report Y3 22 Serbia Competetiveness Systems Strengthening (CSS) Activity

 Over 70 companies received access to finance training  CSS supported companies of all sizes  MSMEs open to equity investment, as BFS Pitching Session demonstrates

CSS focused on building linkages between established service providers and companies from the sector, targeting preparation of investment plans ready for immediate implementation and increasing financial management capacity of firms. The goal of this approach is to move the F&V industry towards modern production processes and high value products in all industry segments, while increasing demand for specialized, financial consulting services The Project contribution to new investments in the F&V industry is $14.6M. This was achieved through provision of customized financial technical assistance or as a result of increased sales and improved operations of assisted companies.

USAID guarantee scheme (DCA) (I3-4) Launch of the first USAID Guarantee in Serbia

After nearly two years of intense collaborative efforts between USAID Serbia and CSS, USAID and MoA signed Agreement for Cooperation to set up a DCA Loan Guarantee with Serbian commercial banks on May 13, 2019. Three commercial banks ProCredit, Addiko and Intesa bank joined the DCA guarantee scheme. The Loan Portfolio Guarantee Agree- ment between USAID DCA and these banks will cover 60% of principal losses on loan dis- bursements made to qualified agricultural bor- rowers. The portfolio totals up to $90,909,091 over a 12-year period. The DCA Guarantee is designed to facilitate long-term investment lending to private sector MSMEs in Serbia including less developed regions of Serbia and newly established companies.

On December 12, 2020 the USAID Serbia Mission Director Mike de la Rosa and the MoA minister Branislav Nedimović launched the loan portfolio guarantee. ProCredit and Addiko Bank both registered for the first tranche of the guarantee in the amount of $10M each. Intesa Bank will likely start utilizing it in the second half of 2020.

Thru local providers, CSS provides technical assistance to companies and entrepreneurs applying for loans with DCA Guarantee.

During the first three months of 2020, the number of MSME applications for loans with the DCA guarantee exceeded banks’ initial expectations. The DCA scheme is especially attractive for companies with sizable IPARD investments.

Results achieved in utilization of loans with DCA Guarantee:  8 companies who received CSS technical assistance were approved or pre-approved for loans with DCA Guarantee totaling $6.4M.  The first loan of $400,000 was to a firm that went thru CSS technical capacity building.  Addiko bank has pre-selected loans in amount of $9.2M and disbursed $4.5M in new loans. Around half of the loans are for companies in the F&V industry. From March 2020, Addiko bank

Annual Report Y3 23 Serbia Competetiveness Systems Strengthening (CSS) Activity

is not receiving new applications as it has already reserved the available DCA amount for pre- selected clients.  ProCredit Bank has pre-selected loans in amount of $7M, and disbursed $4.5M in new loans. Around 60% are loans of companies in F&V industry

Increasing demand for finance (I3-1)

Technical Assistance program Working with three local subcontractors with a track record in the food processing industry, CSS started to support MSMEs accessing finance through individual technical assistance. This includes group or individual trainings, personalized mentoring and development of tailor-made investment plans and facilitation of the borrowing process with a selected lending institution. Over 40 companies participated in full-day Info Sessions in Vrnjačka Banja, Niš, Zaječar and Užice, and additional seven companies received group trainings in Niš and Čačak. Representatives from Pro- ject partner banks ProCredit, Addiko and Erste Bank took part in the trainings. Participants could learn about currently available sources of funding through banks, State agencies including IPARD and the DCA Guarantee. From July to October 2019 over 25 companies received one to one assistance focusing on their specific financing needs. Over 70 companies participated in group or individual Info Sessions - the Project achieved target of 60 companies to receive training. From June to November 2019 the CSS team worked on the selection of companies with immediate investment plans and financing needs to take part in the technical assistance program. In July 2019, selected companies started receiving mentoring, preparing business plans and application documenta- tion. The Project took an active role in matchmaking and facilitating initial contacts between companies, consultants and banks. Starting October 2019, companies began applying for financing. They predominantly submitted loan applications to banks and several micro companies applied for loans from the Development fund of Serbia (DFS). From December 2019 to March 2020, the speed of applications and approvals momentum increased. The onset of COVID-19 measures slowed down the credit activity. During the last few months, the Project team reflected on the lessons learned from the technical assistance program: > Low investment readiness among MSMEs. Investment plans and implementation timelines are usually vague and lack a clear strategic direction for the company. Some companies had multiple changes in their investment plans. This is especially evident among micro companies. > Prolonged selection process with 30% turnaround in the pool of selected companies. The estimated average timeframe from selecting companies with planned investments until the completion of the business plan and submitting the application to a bank was 4-7 months. Applica- tion assessment and approval takes an additional 1-3 months. Thus, the selection of companies had to start much earlier prior to the actual acquisition of investment financing. > The timing of applications for financing is closely tied to the opening of attractive programs with a grant component. These programs include the RAS and bank loans with 25% state grant, and DFS investment loans with 20% or 30% grant. State grants for cooperatives were also launched in the first half of 2019 and the funds were exhausted by the end of summer 2020. Therefore, a small number of companies from our technical assistance program had a chance to participate in these popular grant programs. > IPARD has emerged as a preferable and almost the only attractive financing option for sizable investments. Major focus of CSS were companies with IPARD investment project approval who needed financing in order to complete investment and get 50%-65% investment costs re- funded. The major issue with IPARD is the 6-12 month long process of IPARD approval in the MoA and excessive delays. Consequently, CSS assisted companies were delayed in submitting their loan applications to banks.

Annual Report Y3 24 Serbia Competetiveness Systems Strengthening (CSS) Activity

> The DCA Guarantee emerged as a preferable option for financing sizable investments in the F&V industry. The majority of companies who were looking for financing of over $300,000 were interested in applying for loans with the DCA Guarantee.

Key Results  Exceeded annual target for number of companies receiving financial technical assistance, with 25 companies completing the full scope of the program.  $12.04M total investment in 21 companies  Achieved the annual target for promoting external long-term financing as preferable option for investment financing. Investments in our TA are 75% financed by bank/DFS loans and 25% with client internal funds.  25 companies with investments valued at $12.5M received CSS technical assistance. From these companies, four have postponed or altered planned investments worth $500,000 primary due to the COVID-19 situation.  From 21 companies with investment value of $12.04M, 17 companies applied for loans. 14 loans are already pre-approved or approved and disbursed in part. Three loans are in the approval process. These companies used a combination of external and internal financing at an average ratio of 75% external loans and 25% client participation.  Four micro companies decided to reinvest internal funds primarily due to good business performance and unsatisfactory bank offers.  Sizable IPARD investments dominate our investment portfolio with 12 investments worth $8.1M representing 67% of all investments.

Table 1 Summary of Project Finance Technical Assistance - List of investments no Client Investment Type Value of loan (in US$) 1 Z.A. Fruit Laser sorting machine for frozen fruit and vegetables (IPARD) DCA loan 478,500 2 Jadar pak Double layer tea packaging machine (IPARD) DCA loan 605,000 3 Master Food New organic berry plantations, equipment for cultivation and DCA loan 495,000 WC (IPARD) 4 Flora Equipment for fruit processing and refinancing (IPARD) DCA loan 435,584 5 Fruvita Aseltik line for juice bottling in PAT packaging (IPARD) DCA loan 2,750,000 6 Agrocrop Fresh Greenhouses for vegetable production (IPARD) DCA loan 1,100,000 7 Interfood 60 Equipment for fruit processing (IPARD) DCA loan 275,000 8 H&S fruits Production facility construction Bank Loan 1,491,600 9 Fortis Machines for cultivation of organic berry fields and new organic Bank Loan 1,320,000 plantations 10 Vule komerc Equipment for fruit processing, solar panels and storage con- Bank Loan 738,650 struction (IPARD) 11 Laki Laser sorting machine for fruit (IPARD) Bank Loan 506,000 12 JR Tempo Foods Equipment for fruit drying (IPARD) Bank Loan 429,000 13 Dragan Nova- Cold storage construction (IPARD) Bank Loan 418,000 ković RPG

Annual Report Y3 25 Serbia Competetiveness Systems Strengthening (CSS) Activity

no Client Investment Type Value of loan (in US$) 14 YUMIS Equipment for "Doypack" bags packaging FZR 289,958 15 Splendid Future Equipment for fruit ice cream production FZR 44,750 16 Tartufi SR Equipment for mushrooms (Tartufi) processing FZR 30,928 17 Organic fruit Equipment for fruit processing and construction own funds 185,764 18 Šampinjoni trade Equipment for mushroom cultivation and packaging own funds 118,792 19 ZTR Gordeks Equipment for packaging and storage own funds 15,180 20 Intersad Equipment for strawberry cultivation own funds 57,530 21 Verica Vinčić Anti hail nets for peach plantation (IPARD) DCA 256,699 RPG Loan/Bank TOTAL 12,041,935

CSS supported three start-up companies to prepare applications for EUPRO grants distributed through UNOPS. Two investments worth $62,000 entered the final stage of competition and have a chance of receiving grants of $28,000 each. A decision is expected in May 2020.

Investments as a result of Project activities Many companies who participated in the range of Project activities had investments in fixed and intan- gible assets related to their core businesses. As a part of the CSS annual survey, these companies reported investment. Companies linked these investments to various business activities and increased sales achieved due to participation in Project activities and direct comprehensive technical support received from the Project.

Key Results  36 companies reported new investments in total amount of $ 2.47M financed through bank loans and internal funds  Companies of all sizes reported investments. Micro and start-up companies who participated in the DM Incubator, specialty food hubs and BFS, invested nearly $500,000. Other micro companies investment $741,000. Larger SMEs including berry producers and processors invested $1.26M predominantly in packaging and sorting equipment and certification.  In cooperation with CSS, Erste bank approved three start-up loans totaling $30,000 through its Step by Step program.

Growth through Investment financing

CSS continued promoting alternative financing options especially for micro and start-up companies.

As a part of BFS preparations, CSS trained 10 companies for the first pitching session in Serbia for companies in F&V industries. Ten companies interested in equity investments ranging from $50,000 - $300,000 received an intensive 4-week long training to prepare to present their businesses as attractive investment opportunities. Five companies pitched in front of a group of nine local and regional investors in the food industry comprising large domestic producers and regional investment funds. After the pitching session, investors and companies organized over 20 individual B2B meetings.

Annual Report Y3 26 Serbia Competetiveness Systems Strengthening (CSS) Activity

Now that the Law on Alternative Investment Funds is effective, CSS will reconsider the idea of supporting and facilitating creation of a local investment fund for MSMEs aiming at facilitating investments in agribusiness.

Key Results  Two companies acquired equity investment of $55,000 each  One company signed an NDA and started negotiations for equity investment of $170,000  Two companies started the process of discussing strategic partnerships for production and distribution of their products. Expected value of contracts/investments is $400,000  Two top rated companies from the BFS Pitching sessions will have an opportunity to participate in Belgrade Venture Forum 2020 and pitch in front of international equity investors

FDI, Government Subsidies and Increasing Competitiveness (I3-3) CSS assisted the MoA and RAS in participating at Agriscape 2019 in Abu Dhabi. As an international investment event dedicated to global agricultural assets available to foreign investments, CSS supported this activity in order to help Serbian stakeholders promote Serbian agribusiness potential. The CSS team used the umbrella brand to develop a stand design at Agriscape “Serbia Does Quality Food” slogan. The key message of the stand successfully presented Serbia as a country with high-quality, healthy food and viable opportunities for agribusiness investments. A total of 14 Serbian companies participated. As a result of Agriscape, the MoA is following up with ten potential investors and the results will be reported during 2020.

COVID 19-CONTEXT

The state of emergency measures came during the technical assistance investment financing activity. January to June is traditionally the period when the F&V industry is investing in new equipment and facilities and preparing for the summer harvesting season. As a result, the following are antici- pated adaptations:  Final approval of applications for investment loans submitted for standard and loans with DCA Guarantee to banks is delayed. Assessment and approval of new applications for investment loans are temporarily on hold in many banks. Several companies from our pipeline could not receive financing offers. We also postponed the submission of new applications which was ini- tially planned for March and April 2020.  Many companies have postponed or altered their investment plans. Three companies who completed our technical assistance program decided not to invest. Newly selected companies are postponing their investments.

Annual Report Y3 27 Serbia Competetiveness Systems Strengthening (CSS) Activity

 The pandemic has postponed the banks’ subscription for the new DCA tranche. The DCA guarantee is almost exhausted in Addiko bank, over 70% of the existing limit is pre-selected in ProCredit bank while Intesa has not joined the program yet.  The MoA stopped issuing IPARD approvals for large investments. Our information shows that they will resume in mid-May. Consequently, 5-10 of our beneficiaries will be able to start applying for loans and investing in fall or winter 2020.  The GoS introduced several attractive programs for liquidity and working capital financing through banks and the Development fund of Serbia. Companies are currently almost exclu- sively applying for these mid-term low-interest loans. This puts additional pressure on our capacity to select investment-ready companies applying for investment loans. To adapt to new circumstances, Project decided to help MSMEs to prepare applications for these new programs. Food Technology C

Workforce development CSS actively engages with educational institutions and the private sector to develop models of cooperation and workforce improvement programs. If Serbia’s food processing industry is to become competitive in international markets, research, innovation, and knowledge transfer have to be tailored to re- spond to immediate and future industry needs.

Annual Highlights

 The first professional short term certification course was developed by the FoA in collaboration with the UC Davis Postharvest Center one of the global premier agricultural universities, that has been offering similar course over the past 40 years.  LUKOWA Académie 2.0 program started in November 2019 with 28 students. The number of candidates interested in cooperation with LUKOWA significantly increased from the previous year. This is a positive trend, especially considering this industry is generally unappealing for youth  The Project supported the CandyMoo team take part in the Ecotrophelia Europe Competition in Cologne where the jury awarded their MoCaMela cheese product 7th place among 17 other participating EU teams.

Professional Certification Courses (I2-5) One of the most efficient ways to support stronger linkages between academia and the industry is for academia to provide practical services that address broader industry needs. A professional, short-term certification course “Modern Technologies in Post-Harvest Handling of Fruits and Vegetables”, was developed by the Faculty of Agriculture (FoA). This came out through a partnership with the UC Davis Postharvest Center. The FoA is implementing this effort through AgroNET – Centre for Education and Research founded by a team of professors from the FoA. The UC Davis Postharvest Center provided knowledge transfer and best practice examples. To develop the course, CSS and AgroNET hosted the UC Davis team in Serbia in April 2019. The delegation visited five industry leaders: Sirogojno Company (Rupeljevo), RZ Agro and Agromobil (Guča), Lukowa (Draginac/Loznica) and Agro Bel (Ralja/Kosmaj) to understand their production, post-harvest, logistics and marketing practices and challenged they face. UC Davis together with AgroNet held a workshop on development and implementation of short-term innovative certification courses in the food processing industry. The Project supported the AgroNET team’s study tour to UC Davis on June 17-28, to attend the 41st Annual Postharvest Technology of Horticultural Crops Short Course. During this study tour, the AgroNET team interacted with more than

Annual Report Y3 28 Serbia Competetiveness Systems Strengthening (CSS) Activity

70 F&V industry representatives from all over the world. Together with AgroNET, the CSS team saw an opportunity to create and pilot a similar short-term certification course for food processing companies based on similar models implemented in the US, where the educational system regularly responds to critical market needs. The Certification course “Postharvest Biology and Technology Course” was held December 2-7, 2019 in the Science Technology Park in Zvezdara, Belgrade for 36 participants from 24 various Serbian food processing companies, and guests from Montenegro. AgroNET established the partnership with the Serbian Chamber of Commerce (SCC) who helped in organizing info sessions and reaching companies who registered to participate in the course. The course had four days of theoretical learning and two days of industry visits. Participants learned about post-harvest biology, ripening process, modern cool- ing equipment, packaging and logistics, digital marketing, brand development, access to finance, and future trends in the fruit and vegetable industry. Course materials were presented by AgroNet experts and other professors from the FoA, including some of the most experienced industry representatives (Iceberg Salad Centre, Supply Chain Solutions and Logistics, and Altabox). The two-day visit to industry facilities allowed participants to see the latest technology in the food industry and visit modern growing and storage facilities. The course was designed to assist firms to adopt new practices and technologies and add value to production by increasing both the quantity and quality of high-grade products. After a successful first year of implementation, cooperation with AgroNET will be continued though a new contract to scale up the Course and consider regional options. Based on lessons learned and feedback from participants, the course Postharvest Biology and Technology Course, December 2019 will be further improved in 2020. Furthermore, AgroNET will also develop a new course called “Intensive cultivation of fruits and vegetables in a protected area” with a focus on pre-harvest topics proven to improve fruit and vegetable quality. This initiative supports development of a viable model for continuous learning to enable SMEs in the food sector to overcome challenges associated with recruiting professionals with specialized knowledge to support business and industry needs. AgroNet is expanding activities both nationally and regionally, looking to replicate this model by partnering with local faculties in North Macedonia, Montenegro and Bosnia and Herzegovina. They are striving to become a center of excellence for knowledge exchange between academia and the industry across the region, helping agribusinesses become competitive on the global market. Partnership with Oregon State University (OSU). The Project explored the possibility of a joint extension project between OSU and faculties of agriculture in Central and South Serbia. The most relevant OSU program is the Small Farms Program, which provides small farms with training and research to support their long-term financial and environmental sustainability. The Project signed a MoU with the Faculty of Agronomy in Čačak in September 2019 and a Letter of Collaboration with OSU. After several meetings between Faculty of Agronomy from Čačak and OSU representatives during 2019, the Project decided to involve Sirogojno company to try and combine the concept of the Small Farm Pro- gram with their idea of a Farmer’s college. The vision of this program is to educate farmers in Serbia, many of whom lack formal education in agriculture, and provide them with a “socially accepted status for the profession of agricultural growers”. However, after monitoring the current COVID 19 situation,

Annual Report Y3 29 Serbia Competetiveness Systems Strengthening (CSS) Activity and in coordination with Sirogojno management, it was determined that it is not possible to complete this activity given the travel restrictions and Project end date.

Partnership with Private Sector for New Educational Models (I2-10) Working with the export-oriented companies on developing new educational LUKOWA Académie 2018/2019 models will equip students with the skills and knowledge required for the business Milestone Planned Actuals world, not provided by traditional curricula at Serbian universities. CSS partnered Student Applications 50+ 100+ Selected students for Workshop / CASE with Lukowa to implement the 2018/19 24-30 30 Lukowa Académie program designed to study challenge increase interest in the food industry Students offered internship 4 11 among students and strengthen work- Students employed by Lukowa 2 8 force development. The program was de- Food Innovation Lab / / veloped in close cooperation with three University of Belgrade’s Faculties, Organizational Sciences, Economics and Agriculture. The first pilot of Lukowa Académie ended on May 30th, 2019. The new 2019/20 Lukowa Académie 2.0 program started in November 2019 with 28 students. Lukowa Académie 2.0 organized the Innovation Chal- lenge Day at the FON in December, a competitive event where students apply their practical knowledge and skills to solve a real-world business problems. This year, the task was to develop a strategic plan to strengthen the current B2B business model of Lukowa and provide a long-term innovative solution for the next five- year period. Six student teams presented their solutions and ideas to a panel of judges comprised of repre- Lukowa Academie 2.0 Award ceremony- First place sentatives from Lukowa, Ernst & Young and the Project. The three best ranking teams received prizes, along with the best presenter award, and all 28 participating students were awarded certificates of completion in Sales and Corporate Communications from the Lukowa Académie. Out of those 28 participants:  24 students were invited to interview for an internship and/or employment opportunity  21 were selected- 1 for employment and 19 for an internship (12 full-time; 7 part-time).  4 candidates were engaged to work on the new LUKOWA project called Inno-Food Lab where they will explore ways to innovate the development of new products.  More female students were invited for an interview this year (14:6 ratio of females/males participating in the internship) Lukowa plans to establish a commercial higher educational institution that will be independent from existing faculties that will grow from Lukowa Académie. This program will have the same goal as Lukowa Académie – to provide knowledge and experience in “business literacy” that lack in existing university curricula and to increase interest of students in the food industry as an attractive employment opportunity.

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Tailor-made Internship model for the food processing industry (I2-11) New partnership endorsed by CSS CSS partner, Youth for Impact (YFI), developed the first YfI and international movement Young Profes- standardized and sustainable model of internships in this sionals for Agricultural Development (YPARD) sector, which companies will be able to implement inde- decided to join forces towards a common goal – pendently to improve their capacity and workforce. creating an environment where youth in agriculture can reach their full potential in farming. Internships are mainly for technologists, economists and They agreed on future common projects, joint merchandising positions, suitable for students of faculties research and promotion, as well as sharing use- like the Faculty of Agriculture, Faculty of Organizational ful information, but most importantly they agreed Sciences, and Faculty of Economics. Participating compa- that YFI will be the hosting association for nies will appoint mentors for each student and offer some YPARD Serbia. remuneration for students. A total of 127 students applied for 15 positions in seven companies2. YFI provided trainings for all mentors from six companies and for 20 preselected students. Mentors were briefed on the most important issues of the internship such as good communication and motivation strategies, as well as the plan for monitoring and evaluation of the internship. Students had two orientation trainings addressing soft skills, communication and adapting to the work environment to maxim- ize the internship benefits. The soft skills improvement training covered topics like conflict resolution in a business environment, basics of business communication, critical thinking strategies and presentation skills.

SUCCESS STORY: Sustainable internship models

 20 trained students, out of which 12 got Internship positions in six companies. The 12 students selected for the internship has successfully completed their placements in July and August 2019. The YFI performed monitoring visits to the host companies in late July and early August.  DMV Raw Food hosted two interns. One of them, a food technology major from the Faculty of Agriculture was selected for full-time employment as a technolo-

gist. The Project also supported “DMV Raw food” through the Premium Food Milana Mitrovic, internship student at DMV Raw food created the new recipe for the banana and strawberries desert sold under the brand name “Ro!” Desing Hub activity. The company has two unique brands Zdravo slatko (Healthy Sweet) and RO! Milana Mitrovic, the student who received an employment offer after her internship in DMV Raw food, created a new recipe for the desert made of banana and strawberries.  Menex offered a full-time position as a technologist to another intern  All 20 students who completed the training (including the 12 students who completed the internship) were awarded certificates of accomplishment on September 14.  Promoted this internship model at AgroBelgrade and other events.

2 Results of application process included: 23 students applied to 4 positions at Sirogojno company; 4 students applied to one post in Stanišić BIO; absolute favorite was the DMV Raw food, from Belgrade, where 65 students applied for two positions, out of which 58 applied for the post of technologist in this firm; 8 students applied for two positions in Menex, 5 students for two positions in Allberries, Ivanjica; 13 people are competing for one technologist position in Kiri123; and 9 people will compete for two posts in Nektar company.

Annual Report Y3 31 Serbia Competetiveness Systems Strengthening (CSS) Activity

Ecotrophelia- SAFT (I2-11) The national student competition of eco-innovative food products, Ecotrophelia Serbia 2019 was organized in June 2019, by the Serbian Association of Food Technologists (SAFT) with support from the Project and the Science Technology Park in Belgrade. This year’s event was organized under the aus- pices of Ecotrophelia Europe, the Ministry of Education, Science and Technological Development, and UNDP. It attracted nine student teams from three universities. Student were more interested than last year partially due to extensive promotional activities by CSS. The Project supported the CandyMoo team from FoA, the winner of Ecotrophelia Serbia, to take part in the Ecotrophelia Europe Competition in Cologne. The Ecotrophelia’s European Food Innovation Student Award finals were held on October 6-7, 2019 as a part of the ANUGA exhibition, the world’s largest trade food fair. The 23-member jury awarded CandyMoo’s MoCaMela product (cheese with molasses and honey), 7th place among 17 other participating EU teams. The Project supported CandyMoo with their promotional activities through Des- ing Taste Center, Olivia Market, Deli- cent Market, the Faculty of Organiza- tional Sciences and the Case Study Club, and through participation at BFS and the Balkan Cheese Festival, where they received a special Innovation Prize. The Project is negotiating with the MoA to financially support SAFT for the organization of Ecotrophelia in the future and ensure the sustainability of this important activity. Meanwhile, the student team registered their business and are now a start-up company.

Other Partnership Activities > The Project supported the Belgrade University Faculty of Agriculture’s student competition “Trade, Marketing, Business” on June 5, 2019 by providing mentoring expertise to student teams and participating in the jury. Six teams composed of 7-9 students were competing in developing new products from one of 12 product categories. The jury unanimously pronounced the team ARBO a winner with their innovative product “Aronia flour”. The second team was Dolce Vita with frozen cherries and the third team was Zucca with pumpkin products. > On October 31, Allessandro Silvestri, from Sussex University (UK), held a lecture, Export strategies and planning in agri-sector at the Agriculture Club with the assistance of the MoA. The presentation provided an overview of the European market, human capital as a key internal factor to stimulate growth and competitiveness and business support services as a key external factor to stimulate growth and competitiveness. Twenty participants from PKS, Agriculture Extension Services, Cooperative Union of Serbia and Food Inspection attended the lecture. > Together with USAID’s CFG Project, CSS supported an event organized to mark the 60th anniversary of the Institute for Food Technology and Biochemistry (Institute), a leading education and science institution in the field of food production, conservation, and food safety. Keynote speakers at the event included: Dean of the FoA Dušan Živković, Institute Director Miloš Raj- ković, and Director of USAID’s Office of Democratic and Economic Growth in Serbia Shanley Pinchotti. Over 500 representatives from academia and the private sector, including former and current students, attended the event.

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COVID 19-CONTEXT

 AgroNET offered free consultations related to production, processing, and marketing to company representatives in need of assistance. In addition to the companies who participated in the post-harvest course pilot, 10 other companies were interested in this assistance. All companies used this opportunity to work with AgroNET to receive professional advice related to: improving recipes for new food products, exporting to the EU, positioning products on foreign markets, vegetable production and technology, procedures for protecting product’s geographical origin, and other business issues.  It was determined that partnership between Sirogojno and OSU is not possible given that it re- quires travel to the US and a specific time frame to develop the College. Given the Project is in the last year of implementation there is not enough time to fully develop this Program properly.  The national Ecotrophelia competition is postponed until September. It is still uncertain if the European competition will be organized at all later this year which will determine CSS support.

Strategic Communications The CSS overall communications goal remains the same – building awareness around opportunities for Serbia to innovate and increase trade, expand business partnerships, and attract investments. This was successfully done through intensive Project activities and joining of new partners in Y3.

Annual Highlights

 USAID and CSS are recognized not only by the media as important supporters of the industry and leaders of change, but also by the social media followers from the industry who are in dy- namic interaction through Project channels. They see the Project as a valid authority (expert) to answer lot of industry specific questions,  Konkurentna privreda channels continue to be recognized as an informative and educational online platform,  Facebook remains the strongest communication platform for the Project, followed by LinkedIn,  With the launch of additional channel during Y3, YouTube, the image of the Project has been improved as it is another relevant source of information for the public,  Continuous presence on digital platforms has significantly impacted on relations with selected media outlets, which reflected on greater promotion of news and topics relevant for the industry,  In line with revised Communication strategy in Y3, some changes in digital communication were made that influenced the quality of posts - short, clear, direct messages; even greater focus on partners, producers and their successful stories; greater attention to photos that follows posts; more usage of videos.

CSS continued with activities aimed to position Serbia as a place of innovation in food processing, a delicious food hotspot and a healthy destination. This is achieved by sending clear and strong messages created around established activities and reputable Partners as carriers, and CSS and USAID as supporters. Simultaneously, CSS continues to promote all its activities through CSS communication channels in line with USAID communication and branding strategy.

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Table 2: Promotional events with significant in-kind support by the project communications Event Date CSS Support iTQi Superior Awards cere- Jun 24 Promotional activities before, during and after event; Organization of the mony 2019 promotional event in the Serbian Embassy in Brussels Speciality Fine and Food Sep 1-3 Branding, design of the Serbian stand and promotional materials; Social Fair media and PR campaign DM media event Sep 27 Organization and promotion of the event Panel Discussion about Nov 23 Organization of the event, PR and SM support. Modern Cooperatives 60th Anniversary of the In- Nov 29 Social media and PR activities; support in preparation of the event and pro- stitute for Food Technology motional material. and Biochemistry Agriscape 2019 Dec 9-10 Branding, design of the Serbian stand in line with the “Serbia Does Quality Food” umbrella message. Serbian Association of Dec 11 Promotional video, PR and Social media campaign Managers (SAM) Annual Awards DCA Press Conference Dec 12 Overall organization of the conference, branding, media and communication with partners. Agro Belgrade Jan 30 - Great support in conference organization, branding, PR and Social media Feb 1 2020 campaign Serbia PL Association Mar 6 Organization of the event, Social media campaign, branding. launch event

Promotional events

International Taste Institute (iTQi) Label Certification of product quality and taste is increasingly recognized worldwide by both major retailers and consumers as proof of high-quality, and producers with awarded products gain competitive advantage in increasing sales in domestic and international markets. iTQi, based in Brussels, is the leading independent chef and sommelier-based organization dedicated to certifying the superior taste of food and drink products from all around the world. The Project assisted 5 export-ready specialty food producers from Serbia to select their products and apply for the Superior Taste Award (STA).iTQi awarded all five companies for the following products during the award ceremony on June 24 in Brussels: Agranela (Valjevo) for “Dried plum without preservatives” with 2 Golden Stars; Real Red Raspberry (Bečej) for “Light raspberry jam” with 1 Golden Star; Ecovital (Bikić Do) for “Cold-pressed pumpkin seed oil” with 2 Golden Stars; Happy Honey (Beograd/Kučevo) for “Honey and Plum” with 1 Golden Star and Strela (Leskovac) for “Stripped ajvar, Birano” with 2 Golden Stars. To celebrate the awards, the Project, in collaboration with the Serbian Mission to the European Union, organized a reception at the Serbian Embassy in Brussels. The event gave the awarded companies an opportunity to network with the representatives of the diplomatic corps, Belgium companies and food product importers. News about awarded Serbian products attracted extremely high attention of domestic media, with a great number of requests to producers and CSS representatives for statements and TV appearances.

Annual Report Y3 34 Serbia Competetiveness Systems Strengthening (CSS) Activity

Promotion of DM incubator To promote the official placement of the products in the DM stores, developed during the DM Incubator boot camp phase and raise awareness about the program results a DM media event took place on Sep- tember 27. Speakers, representatives of the DM Incubator Program, RAS and CSS emphasized the importance of cooperation between private, public and academic sectors to incentivize SMEs to innovate new products, support youth entrepreneurship, and strengthen the overall competitiveness of Serbia’s food sector. With 25 media outlets in attendance, the event generated extensive coverage across national-level press and social media platforms, including food and beauty bloggers. In general, this initiative had a great public response, significant media interest, and all together resulted in a great sale of products derived from DM incubators and interest of other retail chains in Serbia. DM promotional videos and photo testimonials - The idea was to capture the DM incubator companies` successes and present producers through documentary-realistic footage which captured the participants talking about their progress in developing/improving their products, obstacles and their general experiences with the DM incubator. Three companies were selected for video footage and all 18 companies participated in photo sessions. Materials were used as success stories during the final campaign of DM Incubator, but also for overall promotion of this initiative and the importance of food hubs in the development and placement of premium products. This activity helped increase awareness about the potentials opportunities in the Serbian food processing industry, communicate the need for attitude change towards agriculture, give strong support to entrepreneurs and change the perception of the food industry as a ‘traditional’ and ‘unattractive’.

Serbian Association of Managers (SAM) Annual Awards SAM and the Project made partnership for strengthening the competitiveness of food industry in Serbia, in terms of successful innovations, youth inclusion and strengthening entrepreneurship. On December 11, at the Serbian Association of Managers (SAM) Annual Awards, the Project partners – Lukowa Akademie (Lukowa), Desing d.o.o (Desing) and DM got awards for strengthening the competitiveness of food industry in Serbia, in terms of successful innovations, youth inclusion and strengthening entrepreneurship. Involvement of selected Project partners in SAM programs is agreed in order to improve their knowledge, skills and create new business connections. Representatives of six companies were selected to participate in Mentorship and Mastermind programs which will last throughout 2020.

Umbrella brand The CSS’s unified brand and design continue to serve as a flexible and easily adaptable tool for multiple CSS-related promotional purposes, particularly international trade shows and events, as well as other PR and marketing opportunities. In order to raise the international profile of Serbia’s fresh fruit and vegetable producers and to increase sales and exports in international markets, the following producers used this brand: > Improved NAPP website to increase visibility and branding under Serbia does Prunes brand. www.serbianprunes.com > SDA continues to promote Serbia apples under the brand Serbia does Apples. Further promotional tools, such as the new web site (www.serbiadoesapples.com), social networks and video material were produced, www.serbiadoesapples.com. > Supported Nasi Vocari, the first Serbian union of cooperatives to become a role model for others and to improve performance on foreign markets. Developed the new visual identity, website, brochure and technical info sheets on products and promo materials, www.ourgrowers.rs.

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International PR activities

Media study tours In partnership with National Tourism Organization of Serbia (TOS), the Project hosted journalists and PR representatives from five of the UK’s leading marketing and publication companies and eight Ger- man journalists and bloggers from the tourism, food and beverage industries. Media representatives included: Wanderlust, Viva Magazine, Time Out, Press Agency PA Media and Rooster PR from UK and Kulinariker, Reisereporter, Express, Stuttgarter Zeitung, Tracks and the City, Escape from Reality, Landmeedchen, Nomyblog, Reiselust-mag and representative from Mascontour GmbH from Germany. The overall idea was to inform international audiences about Serbia and its fine food, gastronomic scene, professional producers and food business events, thereby strengthening the image of Serbia as a food destination, rich in tradition through relatable, human interest stories. Participants had a chance to experience first-hand the country’s natural attractions and fine food from across the country. During the visit, participants visited Project-supported companies exporting F&V products to the EU and UK markets – Atos Fructum (Mala Remeta), Agrobel (Sopot), Flora (Ivanjica), Cold Pressok (Batajnica), Ambar (Belgrade/Washington DC), Zadruga (Belgrade), DM, Belgrade Food Show, Agranela (Valjevo) etc. English journalists published articles in Viva Magazine, Wanderlust, Timeout and PA media. The articles have more than 80 pieces of coverage in media (online and print). The combined total number of visitors to online media where the articles were published is over 82 million! Three articles were published by German media but we expect more in the following period. The next group of media representatives from Sweden will hopefully visit Serbia in August or the beginning of September.

Svet Hoće Domaće (I2-12) “World wants homemade” (Svet hoce domace) educational and promotional platform: Svet hoce domace (SHD) is a unique educational and promotional platform for domestic specialty food products launched in September 2018. It increases the capacity of Serbian SMEs to utilize online space- web page, Facebook and Instagram profiles for marketing and promotion, but also covers other topics of their interest. In a very short time SHD has become an important place for the promotion, education and experiences exchange for domestic specialty food producers. During16 months, SHD established contact and cooperation with more than 110 producers and companies, out of which 52 joined the platform. So far, SHD organized 17 educational sessions, panel discussions and workshops on topics like branding and design, B2B communication, trade shows presence, producer’s expectations and needs, etc. Large fan base was created, with 26,274 fans on Facebook, and 5,404 followers on Instagram. Hashtag #svethocedomace started going viral.

Impressions Engagement Reach Mentions Number of posts Fans Facebook 2,174,861 141,169 1,874,030 73 129 26,274

Impressions Engagement Reach Number of posts Fans Instagram 940,863 179,277 762,999 387 5,404

A new activity plan is being developed that has a wider range of topics to include more participants and expand to fresh and frozen segments through targeted educational modules. This will be accompanied by further development of SHD promotional channels as a unique place for the promotion of (high) quality local food in order to make a stronger communication to consumers, build nation-wide recognition and ensure sustainability.

Annual Report Y3 36 Serbia Competetiveness Systems Strengthening (CSS) Activity

Producers, organizations and associations from the fresh and frozen sectors, with a focus on berry fruit, apples and - wine (autoch- thone sorts) will be able to get support to improve their promotional performances and capacities. This is one of the most important tasks of SHD - to show the need for change and to encourage it. It is expected that more companies will be ready to join and to invest in its pro- YouTube link to Svet Hoce Domace session: motional capacities. https://www.youtube.com/watch?v=N6BVoNhh7Kg

CSS Communication Channels CSS launched YouTube Channel “Konkurentna Privreda” in order to gather numerous promotional video materials on one place (whether it is a short promo video from the event or TV appearances) and to achieve better engagement with audience - video format posts receive 59% more engagement than other FB posts. YouTube is an additional promotional tool which provides larger exposure of the Project and its activities. CSS organized and supported numerous activities that were intensively promoted through traditional and online media outlets.

Impressions Engagement Reach Mentions Number of posts Fans Facebook 10,076,751 292,729 8,319,093 116 263 44,202

Impressions Number of clicks Social actions Number of posts Followers LinkedIn 608,276 31,793 5,995 237 3,081

Impressions Engagement Mentions Number of posts Followers Twitter 128,822 1,921 54 201 381

Impressions Total views Number of videos Subscribers YouTube 19,540 4,675 219 22

Media and Social Media Monitoring In most media appearances the Project was mentioned as an initiator of each activity which is resulting in extremely successful PR campaigns. Media support included print (62), online (392), TV (68) and radio (15) appearances – total 537. The sentiment was 100% positive. USAID was mentioned in 407 articles. The most followed topics were Agro Belgrade, Belgrade Food Show, DM incubator, Premium Food Design Hub, AgroNET courses, DCA. On social media, Facebook remains our strongest channel on which the public is constantly returning and sharing our activities, with 11,266 new fans in Y3. Facebook page had exceptional results in Y3 with 2,035 shared posts and 116 mentions with an engagement rate of 3.51% which is considered to be excellent. Twitter engagement rate of 1.5% is good (0.2% to 0.9% are considered to be good). LinkedIn engagement rate of 0.98% is also good.

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COVID 19-CONTEXT

 CSS communication refocused and fully transferred to online channels. In order to support CSS partners and numerous social networks fans, more focus is placed on sharing important industry information – from Serbia and internationally, education – sharing presentations, interesting lectures from BFS, SHD, AB, etc.; posting interesting articles about Serbian producers and success stories, inviting people to buy online, to buy local products, especially fresh fruit and vegetables.  SHD focus changed in order to support producers. Supportive messages, advices, exchange of experiences, global examples are main topics. In March CSS organized online educational conferences, panels and webinars in order to support producers, ease access to the right information and facilitate views exchanges on key issues that would help producers tackle the Covid-19 situation easier. The introductory panel discussions, “Food Industry in Challenging Times” were held at the end of March, and attracted more than 200 participants, provided insights in the current situation in the food industry in Serbia, experiences of large and small producers, ways to adapt, expectations and next steps. The webinars will be organized on weekly basis, followed by the development of current situation. Next issues will address the on line sales, situation in fresh segment and ways of export, challenges that HoReCa sector is facing, access to finance in times of crises.

 Since CSS communication channels are already established and recognized as an important source of information for media and industry partners, the Project used the opportunity to share pertinent content related to the food processing industry in Serbia and the rest of the world. Promotional efforts focused on the following: publishing instructions developed in partnership with the MoA on how to protect individuals from contracting COVID-19 in the field and in processing facilities; sharing educational materials and presentations delivered at the BFS 2018 and 2019, as well as at the Agro Belgrade Fair 2020; and publishing informative media articles about Serbian producers and success stories. In addition, the Project supported the “Buy Local and Buy Online” initiatives by encouraging consumers to purchase goods online, particularly fresh fruit and vegetables, with detailed store information, including location, products and delivery options. The content is mostly focused on how businesses can challenge the coronavirus situation, how to deal with the current situation when it comes to selling products etc. Moreo- ver, the Project shares educational material from numerous events that took place in Year 3 along with success stories and promotional articles about Serbian producers.

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