USAID CSS Y4 Annual Report

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ANNUAL REPORT #4: APRIL 20, 2020 – APRIL 19, 2021 SERBIA COMPETITIVENESS SYSTEMS STRENGTHENING (CSS) ACTIVITY

May 20, 2021 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 #4: APRIL 20, 2020–APRIL 19, 2021 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. Table of Contents ACRONYMS ...... 2 EXECUTIVE SUMMARY ...... 3 ABOUT THE ACTIVITY ...... 4 SUMMARY OF SURVEY RESULTS ...... 4 CONTEXT ANALYSIS ...... 4 FRUIT AND VEGETABLES ...... 5 PERFORMANCE ANALYSIS ...... 8 OVERALL PERFORMANCE INDICATOR – GROWTH OF SALES ...... 8 OBJECTIVE-SPECIFIC PERFORMANCE INDICATORS ...... 11 SUSTAINABILITY ANALYSIS ...... 15 COMPLIANCE WITH THE THEORY OF CHANGE ...... 15 SCALABILITY AND REPLICABILITY OF ACTIVITIES ...... 16 COLLABORATION, LEARNING AND ADAPTATION (CLA) ...... 17 TECHNICAL ACTIVITIES Y4 ...... 18 STRATEGIC COMMUNICATIONS ...... 51 ANNEX A: PMP TABLE ...... 59 ANNEX B: PROGRESS AGAINST YEAR 4 WORKPLAN ...... 62 ANNEX C: SUCCESS STORIES ...... 67 SUCCESS STORY #1 (Y4Q1) ...... 67 SUCCESS STORY #2 (Y4Q2) ...... 70 SUCCESS STORY #3 (Y4Q2) ...... 72 SUCCESS STORY #4 (Y4Q2) ...... 75 SUCCESS STORY #5 (Y4Q3) ...... 78 SUCCESS STORY #6 (Y4Q4) ...... 81 MUNICIPALITY-LEVEL REVOLVING FUND MODEL CREATES NEW FINANCING OPPORTUNITIES FOR SMALL FARMERS AND GROWERS IN SERBIA...... 81 ANNEX D: SELF ASSESSMENT ON PROGRESS ...... 84 ANNEX E – ANNUAL ASSESSMENT METHODOLOGY ...... 85 EVALUATION PURPOSE ...... 85 EVALUATION QUESTIONS ...... 85 EVALUATION METHODS AND LIMITATIONS ...... 86 ANNEX F – ADDITIONAL COMMUNICATION HIGHLIGHTS ...... 89 ATTACHMENT A: CSS ORG. CHART ...... 93 ATTACHMENT B: CSS GRANTS AND SUBCONTRACTS UPDATE ...... 94 ATTACHMENT C: PRESS CLIPPING ...... 106

Annual Report Y4 1 ACRONYMS AgBg AgroBelgrade Food Show AMELP Activity Monitoring, Evaluation and Learning Plan 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 COVID Coronavirus disease 2019 CSS Competitiveness Systems Strengthening DFC (DCA) U.S. International Development Finance Corporation / Credit Authority DFS Development Fund of Serbia 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 GOS Government of Serbia HoReCa Hotel/Restaurant/Café ILC Industry Leader Company IQF Individually Quick Frozen IPARD EU’s Instrument for Pre-Accession Assistance in Rural Development MENA Middle East and Northern Africa 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”) PMP Performance Monitoring Table RAS Serbian Development Agency RF Results Framework SDA/SDF Serbia Does Apples / Serbia Does Fruit SAFT Serbian Association of Food Technologists SFTC Serbian Food Technology Council SME Small and Medium Enterprise VC Value Chain VCRA Value Chain Readiness Assessment YFI Association Youth for Impact

Annual Report Y4 2 Executive Summary This is the fourth 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 achieved full sustainability of several initiatives, replicated successful models to a new industry segment, and supported scale-up of several other efforts, all the while confronted with the COVID-19 pandemic, which certainly impacted the markets in un- predictable ways. It has become clear in Y4 that Serbia is now a recognized supplier of high-value, grade A fresh produce to the EU. Serbian blueberries, apples, plums, and peppers can now be found in the biggest retail shops across the entire EU and UK, as well as other, more distant markets. Pro- motional articles are a regular occurrence in the most important EU sector printed and digital media, and the biggest EU buyers are now sourcing from Serbia. More and more Serbian SMEs are investing in modern packaging equipment and adopting new standards of production such as certification, as well as digitalization and new technologies. This shift towards high-value EU markets is now in full swing and will prove to be transformational for Serbian market systems. The Serbia Does Fruit platform, which facilitated this process of change, requires additional support to become fully sustainable and continue building on work so far completed. And these topics are actively discussed and debated at AgroBelgrade, which is quickly becoming the most important regional trade show for fruits and vegetables, with strong international partners and attendance from the entire region. Similarly, the frozen industry is now fully pursuing the shift to organic production, with more and more smallholder farmers from rural areas benefiting from the shift by leading Serbian exporters to exploit this market niche This trend is also now in full, market-driven scale-up mode. Finally, Serbian retail has made important strides to provide openings for micro and small firms operating in the specialty food sector. DM incubator was an important sign for others to step up and develop their support programs. E-commerce platforms, domestic and international, have been fully mobilized and have opened channels for additional sales. Desing established a successful model for adding value to traditional Serbian products, in this case, products made with the Oblachinska sour cherry, and for developing retail-ready products. Finally, the Bel- grade Food Show became sustainable in Y4 and is now fully funded by the industry and the Government of Serbia (GOS), providing a platform for learning and knowledge dissemination. Building on this work, wine was added as a new segment to project activities, with a focus on Prokupac as a strong local asset for opening international/EU markets where Serbia has not had much success. The fifth Prokupac Days event in 2021 was the most international so far, and AgroNet already added a course to its portfolio working with winemakers on improving their production processes, marketing, and sales strategies, including e-commerce. All of these efforts continue to be supported by academia through AgroNet trainings, in partnership with UC Davis, that now include three different courses. Ecotrophelia already became the biggest and most visible competition promoting youth entrepreneurship in the industry, also fully sustainable. Financial services available to firms have scaled up dramatically, supporting the DFC guarantee line as well as all other available sources of finance, and local consultants register newer and repeat customers, many of who come from underdeveloped areas. Finally, an innovative revolving fund for supporting “unbankable” farmers has been set up with Cajet- ina municipality, with potential for substantial scale-up in Y5 and Y6. These efforts are big contributors towards establishing strong networking links between industry stakeholders that will guarantee sustainability and growth of project interventions in years to come.

Annual Report Y4 3 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 five and a half-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 fruits and vegetables (F&V) sectors, it is expected to create a “ripple effect” into other VCs, so that the strengthening Serbia’s overall competitiveness system gathers momentum and is self-sustaining. For this reason, the Project 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 exclusively rests on working through and strengthening capacities of local partners. If CSS can strengthen relationships between these stakeholders in selected value chains (VCs), supported by effective communication and monitoring, and focused on key systemic gaps, then CSS will stimulate investment in VC upgrading, elevating the competitiveness of the entire VC, leading to increased sales, investments and replication of the approach in other sectors.

Summary of Survey Results As a part of the CSS Annual Assessment activity, the project team completed the Context Analysis and Project Analysis, detailed below. The Assessment Methodology is presented in Annex E Context Analysis Agri-food Industry: The agri-food industry1 in Serbia is more important to the economy than it is in any other European country, contributing 10.6%2 to gross value added (2019) and employing 131,364 (2020) people formally, and over 600,000 people in total (formally and informally) – a fifth of the total employed persons in Serbia. The elevated role of agri-food in

1 Agri-food sector consists of Agriculture, forestry and fishing, Manufacture of food products, and Manufacture of beverages 2 Gross value added, by activities, NACE Rev. 2, Statistical office of Serbia

Annual Report Y4 4 Serbia’s economy lies in the country’s relative abundance of agricultural land, favorable climate conditions, long agricultural tradition, deep linkages of Serbia’s population (both rural and urban) to the land, and a high percentage of the rural population. Serbian agri-food exports made up 18.7% of Serbia’s total goods exports in 2020. During the last decade, agri-food exports have recorded steady and relatively dynamic growth of 8% annually. During that ten-year period, exports have expanded by USD 1.941 billion and reached USD 3.654 billion in 2020. The agri-food sector has achieved strong export growth in 2020, compared to 2019 (a 12% increase), led by its two most dominant subsectors: cereals (year- over-year growth of 17%) and fruits and vegetables (12%). Key determinants of this growth during a crisis year could be explained by the global failure of supply chains, but also by the resilience of Serbia’s agri-food supply system and its ability to produce a surplus of food, and by growing demand in the EU market. Around two-thirds of Serbia’s agri-food export comes from five agricultural groups: corn, wheat, raspberries, apples, and animal feed. However, raspberries and apples, along with several other fruit and vegetable VCs, present the biggest opportunity for growth for the Serbian processing industry. s A fundamental problem (key systemic gap) for fruit (and vegetables) SMEs, however, is low integration with high-value markets that can drive improvements and adoption of new technologies, and very high fragmentation of both primary production and processing. Much of this fragmented chain operates in the traditional, subsistence manner, rather than for commercialized, modern markets. High fragmentation is reflected in the average land holding size of only 6 ha, with holdings in the south and east Serbia being much smaller than this average. It is clear that the agri-food sector needs to consolidate and transform from a supply-driven to a demand-driven sector (i.e., capable of proactive positioning in international markets) in order to increase its value-added and value chain length.

Fruit and Vegetables Fruit and vegetables (F&V) are the most competitive segment of Serbia’s agri-food industry. They also have the highest potential for growth due to Serbia’s proximity to the EU market, favorable climate conditions, and changing consumption/dietary patterns in the world. Serbia’s fragmented land structure has some advantages – relatively small land plots do not require a large workforce, are already limited in Serbia, and a greater economy of scale is less important compared to some other agri-food sectors. In addition, Serbia has already built a burgeoning reputation as one of the world’s largest producers of certain fruit varieties such as raspberries, sour cherries, and plums. Finally, trade protection measures relevant to the F&V sector are relatively weak compared to other sectors. Favorable export trends have continued in 2020, as Serbia managed to overcome Covid- 19 related challenges and achieve its highest-ever level of F&V export. Exports totaled USD 987 million in 2020, 12% more than in 2019. Fruit products compromised 80% of exports (USD 776M). Frozen fruit products (raspberries and sour cherries dominant) were the majority export segment, comprising more than 50% of F&V export. Fresh fruit products - mostly apples, but also blueberries, strawberries, and other stone fruit, and fresh vegetable products such as peppers contributed more than 30% to total F&V exports. The remaining share comprised of warm processing products, almost evenly distributed between juices (apple and sour cherry), canned products (potato, nuts), and dried products (apricots, plums with significant production base, and mushrooms).

Annual Report Y4 5 The Russian Federation (213M USD; 21%) is still the single most important F&V export destination, followed by Germany (195M USD; 20%), other high-developed EU countries (France, Austria, Belgium), and the United Kingdom. Russia is the main destination for the majority of fresh fruit products (apples, apricots, and strawberries) and the EU is a key market for the more expensive frozen segment (raspberries, sour cherries). Vegetable exports are more diversified and generally sent to the Central European Free Trade Agreement (CEFTA) region and neighboring markets given the perishability of these products. The large North American market is becoming increasingly important for Serbia’s frozen fruit exporters. Export to the United States and Canada reached 52M USD, an increase of 24M compared to 2016. Frozen raspberries, blackberries, and sour cherries were the key exports. Although Serbia’s overall structure in terms of product portfolio and market destinations remains relatively similar from year to year, some important and positive underlying trends are emerging. The majority of CSS interventions can be linked to these trends, contributing to or initiating these changes, as described below. > After years of steady decline, Serbia’s export of its flagship product – frozen raspberries – has finally recovered in 2019 and reached its historical maximum in 2020 (296M USD). Raspberries are Serbia’s traditional and most important agri-food product for export, however, decades of dominant cooperation with 2nd and 3rd tier intermediaries, high production fragmentation (raspberries are generally produced by small and low-income households), and low levels of trust and organized cooperation among value chain actors has led to quality control issues and decrease in product value. This has threatened to jeopardize Serbia’s competitive position for this product. The CSS Project has thus been actively working with key industry stakeholders on developing models for supply chain consolidation, along with value-addition through organic production expansion in order to drive value for small producers who are rapidly abandon- ing rural areas. This is primarily done through partnering with reputable industry leaders with strong connections to high-value markets (such as Sirogojno, Lukowa, Fortis, Menex, Frutorga, Van Drunen Farms Europe) on establishing effective “hub and spoke” models (cooperatives), especially in underdeveloped parts of Serbia. The models are systematically promoted and discussed through high-profile events such as AgroBelgrade Trade Show (AgBg) (key to information dissemination) and courses conducted by AgroNet. > Apples are still predominantly exported to the Russian market, where producers are facing increasing competition and unclear future market prospects. Market diversification is thus crucial in order to avoid this key market risk, especially with Russia’s intensive import substitution efforts. Between 2016 and 2020, apple exports to Russia fell (from 122M USD in 2016 to 103M USD in 2020), as did the share of Serbia’s apple export (from 95% in 2016 to 84% in 2020). This reduction in apple exports to the Russian market has however been compensated by gains in exports to Middle East markets, the United Kingdom, and Romania, and Serbia’s apple exports have remained stable. Export to these markets grew by 13M USD, increasing from just 1,142 M USD in 2016 to 14.8M USD in 2020. The CSS Project has significantly impacted this market diversification process through developing the “Serbia Does Apples” (SDA) professional association which specifically provides support for market discovery, market penetration, and marketing for apple producers and exporters. SDA’s members have significantly contributed to Serbia’s growth in the EU market, especially the UK, Romanian and Hungarian markets; exports have increased as much as 10 times prior levels in these three markets. > Export of other berries, especially blueberries, has been growing rapidly. Export of blueberries increased by 30,8M USD, reaching 35,4M USD in 2020 compared to 2016.

Annual Report Y4 6 Fresh berries comprise half of the export, with the majority going in bulk to Netherlands and Russia. The other half is frozen segment products, with Germany being the single most important market. There are early indications that Germany is also becoming an important market for the fresh segment, as export value reached more than 1M EUR in 2020 compared to 2019, in which fresh blueberries were not exported to the German market. This is also primarily due to CSS interventions. In order for emerging Serbian exporters to move away from bulk towards higher-value market segments, improved market intelligence is critical. CSS, through the Serbia Does Fruit association, developed a market analysis process and identification of high-profile EU buyers willing to source small, higher value packs from Serbian companies. Links with these buyers led to Serbia being recognized in the EU market as a reliable and trusted supplier, but also drove investments in packaging machines, and in building strong cooperative networks with small farms emerging all across the country. Some vegetable crops, like gherkins, cucumbers, peppers, and mushrooms, have exhibited early signs of potential for export to German, Italian and Austrian markets. Export of these products has more than doubled during 5-year period and reached almost 57M USD. Fresh gherkins and cucumbers exports increased significantly, reaching 11M EUR compared to nearly nothing (less than 1,142M USD) in 2016. The majority of these exports have been directed towards the German market. Gherkins are produced by true small farmers who are among the poorest in Serbia. It is a crop that, together with peppers, can provide high income on small pieces of land, critical to sustaining producers on farms and expanding their operations. The CSS Project, together with industry leader RZ Agro, developed a model to build a cooperative of 240 farmers for modern gherkin production. The model included a comprehensive value chain financing package for these farmers, including insurance. This allowed smallholders to enter into commercial agricultural production, and later qualify for state subsidies and banking products. On the other side of the spectrum, CSS also supported the development of a modern supply chin, with high value, modern production of fresh vegetables in a protected environment, together with Delta Agrar. This collaboration established an innovative hub & spoke model with a focus on digitalization and high-tech production (zero residue production) on small farms. This pilot is a blueprint for sustainable, environmentally safe production. The specialty food segment faces obstacles with market expansion. In Serbia, micro-enterprises engaged in specialty food production mostly rely on the domestic market for sales. Dif- ficulties with access to retail, a dominant gray market, and issues with economies of scale force these enterprises to rely heavily on the hotel/retail/café sector (HORECA) and joint marketing efforts to reach consumers. This segment was heavily impacted by the COVID-19 outbreak, with most of HORECA shutting down, exposing the vulnerability and weaknesses of this market. CSS initiatives, most already sustainable, were able to provide responses and support to this crisis, connecting e-commerce distributors and firms, mobilizing buyers/retail chains to show more support to firms during this difficult time, and discussing options for supporting the industry during third Belgrade Food Show (already fully sustainable, and delivered in online format). CSS expanded its activities under specialty food to support the wine industry, specifically working with the (local grape variety) Prokupac producers. The major promotional event in 2020 was the fifth Prokupac Days event, a series of high-profile promotional and educational wine-related events that aimed to increase the visibility of Prokupac locally and internationally,

Annual Report Y4 7 improve networking and knowledge sharing between local and international industry experts, and boost international recognition by popularizing the variety across a diverse range of media channels. Due to this event, and despite of COVID-19 reducing sales in the sector by more than 15%, in October 2020 wineries and distributors recorded an increase in the number of bottles of Prokupac sold by 30 to 60% compared to the same period in 2019, while in the HoReCa system this increased from 15% to 50%. Some restaurants have included wine from Prokupac in their permanent offer. Performance Analysis CSS has met most of its key targets as defined in the AMELP. Interventions have largely succeeded in reaching out and adding value to industry lead firms, suppliers, startups, business associations, industry service providers, and primary producers that CSS worked with. These interventions have taken into account the level to which key stakeholders, beneficiaries, and direct recipients of technical assistance are aware of the need to upgrade their operations in line with international best practices and standards. CSS actions have significantly enhanced participating firms’ and producers’ operations. However, as could be expected, the Covid-19 pandemic has negatively impacted the performance of some of the Project’s activities. Activities that usually require or are better suited to the physical presence of participants, face-to-face meetings or gatherings, and traditional offline events – such as different types of technical assistance and capacity-building trainings or collaboration between business and academia – were hindered by the pandemic. Therefore, the values for some indicators are lower than 2019 results, but still significantly better than the baseline, and in line with annual targets set by the CSS AMELP. Below, Y4 values for each indicator are provided, along with a discussion of reasons for meeting, exceeding, or not yet reaching established targets. See Annex A for the complete PMP table.

Overall Performance Indicator – Growth of Sales Difference in median growth rates of sales between treatment and control group –15.4 p.p

P-1 Sales Growth Y1 Y2 Y3 Y4 Target 0% 4% 8% 11% Actual 0% 10% 6.6% 15.4%

Growth of sales has been defined as the key benchmark for evaluating project performance and its overall success3. This indicator is also a proxy for sustainability – increased sales of CSS- supported firms reflect their ability to compete regionally and internationally, and therefore their ability to grow, hire more employees, advance their technologies, and have an impact on the national economy. All CSS activities ultimately contribute to the successes of this indicator, but some actives are intrinsic to and directly improve sales performance: new markets and buyer discovery, product value improvement along the entire value chain, and product volume expansion (including expanding product portfolio). Data for 2020 was collected through an annual survey covering 296 companies from the F&V sector. Out of that number, 195 belong to the “treatment” group – firms that are the beneficiaries of CSS support; while the remaining 101 firms comprise the “control” group – firms that

3 Activity Monitoring, Evaluation, And Learning Plan

Annual Report Y4 8 do not participate with CSS. However, although 296 firms were surveyed, sales data for only 143 of them (95 from treatment and 45 from the control group) was considered valid for analysis. The remaining 153 surveyed firms did not provide sales data for both requested years; they were either not willing, did not have permission, or did not know how to answer the question. According to carefully analyzed sales data, firms that have received CSS support (treatment group) have significantly increased their market sales compared to firms that have not been beneficiaries of support (control group). The median growth rate4 in 2020, compared to 2019, of treatment group firms was 15.4 percentage points (p.p) higher than that of control group firms (15.4% vs 0.0%). Comparing average growth rate5, CSS-supported firms grew significantly more than control firms, surpassing control group firm average growth rate by 29.4 p.p. (34.4% vs 5.1%). The discrepancy is also demonstrated in the firm total growth rate6, which stands at a difference of 16.2 p.p. (9.4% vs -6.8%). In addition, 65% of CSS-supported firms increased their y-o-y sales compared to 40% of control group firms. The better sales performance of treatment group firms observed across all sales growth indicators is shown in the figures below.

Growth rate of sales Difference between growth rates (percentage points) 60.0 50.0 50.0 35.0 34.4 40.0 29.4 28.3 30.0 30.0 25.0 21.7 Treatment 23.5 24.2 20.0 15.4 25.0 9.38 % 5.1 6.8 18.4 10.0 20.0 16.2 0.0 Control 15.4 0.0 15.0 0.0 0.8 -10.0 -6.79 10.0 -20.0 -11.6 5.0 -30.0 -23.5

0.0 Growth difference(percentage points)

In the terms of net value creation, CSS-impacted group firms that disclosed sales data earned in total $50 million more than in 2019 (97 firms), out of which $38 million were exports (57 firms). The top five CSS activity categories in which firms that increased sales in 2020 participated in the past years (67 in total), ordered by the absolute USD value of sales increase, and by the total percentage increase were:

4 Median growth is the most balanced measure, as it pinpoints the middle value, signalizing that half of the companies exhibited a higher growth rate, while the other half achieved slower pace. Therefore, it eliminates the effect of dominant firms in sector and outliers as would be seen with average rate of growth. 5 Average growth indicator gives more weight to fast-growing companies, usually smaller ones and start-ups, as they tend to have much more intense rates than already established companies. Therefore, average figure is usually higher than the median one. 6 Total growth indicator gives more weight to growth of larger and already established, dominant firms, as their share in total sales is higher, compared to smaller companies.

Annual Report Y4 9 Table: Five most impactful categories of CSS assistance to firms that increased sales in 2020 By total value (USD) of sales increase By total percentage of sales increase 1. A2M – Industry Leader Value Chains (19 firms) 1. A2F – Technical Assistances (25 firms) 2. A2F – Technical Assistances (25 firms) 2. A2M – Trade Fairs (54 firms) 3. A2F – Educational activities (16 firms) 3. A2M – Industry Leader Value Chains (19 firms) 4. A2M – Trade Fairs (54 firms) 4. A2M – Traders (21 firms) 5. WFD – Educational activities (10 firms) 5. A2M – Tech. Assistances and Mentoring (15 f.)

Interviews with CSS Project partners and other key informants indicate that many F&V producers, after initial setbacks during the state of emergency, managed to keep a sufficient number of workers active, in order to avoid output disruptions. On the demand side, consumers seem to have generally increased their demand for these products – especially fresh and organic, reflecting nutrition and health benefits. The various lockdowns implemented across Ser- bia and Europe may also have allowed more time to prepare dishes with fresh fruits and vegetables at home. Part of the increase is also owed to the initial lockdown-induced “panic buying”. It is indicative that treatment group firms have exhibited such strong performance despite the negative impact of the Covid-19 pandemic on society and the economy. In the case of F&V, Serbia’s domestic sales and exports during the pandemic both appear to have remained stronger than expected at the onset of the crisis, which suggests that these supply chains are more resilient than assumed. The table above demonstrates that CSS Access to Markets activities with industry leaders contributed the most in absolute USD value of sales increase. By growth percentage, however, firms that participated in Access to Finance Technical Assistance for investments (DFC, IPARD, bank loans, etc.). These activities can also be considered strong contributors to CSS-supported firms’ relatively strong performance during the COVID-19 crisis and in comparison to non-supported firms, and to CSS’ overachievement of its Y4 target for sales growth.

CSS worked with AgroBel and six other Serbian fresh berry exporters (Sirmium Fruits, AgroBel, Berry4You, Prima Blueberry, Popic Blueberries, De la Tero and Berry Care) to open new markets in the European Union. After thorough market research, CSS identified over 70 potential berry buyers and distributors and linked them with Serbian firms. AgroBel and Fruit World (a distribution subsidiary of the Best Fresh Group, a leading company in the Netherlands) connected leading to AgroBel exporting small packs of blueberries to the EU. These efforts, together with significant investments in the quality and standards of Agrobel’s suppliers, have yielded noticeable results in 2020. According to Agrobel’s analyses and figures, the company has more than tripled its number of local suppliers (from 12 to 41) and the quantity of purchased fruit (from 43 to 148 tons). Broadening the network of suppliers, coupled with opening up new markets and finding new buyers in the EU, resulted in a 10- fold increase in exports (from 2 to 20 tons) and more than doubled AgroBel’s overall sales (from 66 to 157 tons) in 2020, compared to 2019. These networking and matchmaking effort are being itera- tively transferred to the Serbia Does Fruit Association, promoting their sustainability and local ownership.

Although treatment firms have benefited from CSS support, it should be highlighted that better performance of CSS-supported firms is mostly due to commitment to a market-driven selection process. Almost all Project beneficiaries were selected by Project lead partners or buyers/markets, involving those that are serious about upgrading and changing. Lastly, better performance can also be partially explained by the greater share of startups among supported companies, whose growth rate is usually higher in first years of business. Also important to note is that most interviewed partner firms stated that CSS’ contribution has been an important factor in

Annual Report Y4 10 their growth and that they would not be able to implement activities in such a dynamic pace - or at all - without CSS support. The key driver to change is also the fact that CSS is diligently focused on targeting the best buyers (for example, Total Produce and Greenyard, the biggest distributors of F&V in the EU) and highest value markets. Their presence in Serbia is the signal for other EU and world buyers to seek suppliers here, just as the successes of CSS SME partners are a signal to other SMEs in Serbia to follow the same path (and models).

Objective-specific Performance Indicators In order to achieve its overall objective of strengthening the market system, CSS has defined specific interventions targeting the root causes of systemic underperformance problems. All CSS interventions are grouped into three specific objectives. The first refers to strengthening business support systems coordination; the second is focused on enhancing market competitiveness of selected value chains; and the third focuses on the mobilization of resources for enterprise growth. Although the key benchmark indicator (sales) illustrates CSS’s overall impact, the sustainability of the Project’s impact is better portrayed by indicators measuring the effectiveness and coverage of its interventions.

Sub-purpose 1: Enhancement of market competitiveness of selected value chains Number of beneficiary firms (impacted by/participating in) CSS activities in Y4: 189 firms (126 new). Total Y1-Y4: 618 firms

Y1 (2017) Y2 (2018) Y3 (2019) Y4 (2020) BENEFICIAIRES # # new Y1-Y2 # new Y1-Y3 # new Y1-Y4 Organizations (any) 114 289 260 374 297 122 552 192 129 681 Firms - all sizes 106 249 225 331 269 161 492 189 126 618 Firms – SME 105 240 217 322 262 156 478 184 125 603 Firms - Micro 52 134 125 177 169 115 292 113 76 368 Firms – women owned 38 86 77 115 96 56 171 57 38 209 or managed Firms – women owned 22 47 44 66 55 35 101 36 23 124 (more than 50%) PARTNERS 11 34 30 41 16 14 55 7 2 57

1-1 Number of firms receiving USG-funded technical assistance to export (EG 2.2-1) in Y4: 69 firms (40 new). Total Y1-Y4: 309

Y1 (2017) Y2 (2018) Y3 (2019) Y4 (2020) Target – new firms (cumulative total) 20 35 (55) 55 (110) 80 (190) Actual – new firms (cumulative total) 21 147 (168) 101 (269) 40 (309)

Annual Report Y4 11 1-2 Number of private sector firms that have improved management practices or technologies as a result of CSS interventions in 20207 – 105 firms (58 new). Total 2017-2020: 238

Y1 (2017) Y2 (2018) Y3 (2019) Y4 (2020) Target – new firms (cumulative total) 20 30 (50) 45 (95) 60 (155) Actual – new firms (cumulative total) 29 77 (108) 74 (180) 58 (238)

1-3 Number of business linkages between Serbian food processors and local, regional, and international buyers in Y4 – 259. Total: 559

Y1 (2017) Y2 (2018) Y3 (2019) Y4 (2020) Target – new contracts (cumulative total) 0 20 (20) 25 (45) 35 (80) Actual – new contracts (cumulative total) 15 111 (126) 174 (300) 306 (606)

In Y4, 189 firms participated in project activities, out of which 126 were new firms – a significant achievement given challenges the pandemic imposed on many businesses in 2020. Cu- mulatively, 618 firms have participated in project activities since project start. For those activities designated as “export activities” (Indicator 1-1), 69 firms participated (40 of which were new) in Y4. Although the actual number for Y4 is lower than the target (80), the cumulative actual (309) surpassed the cumulative target (190) by 60%. This is because the dynamics of adding firms to participate in the project changed significantly from initial estimates, which assumed that the project would start slower and the largest crowding-in would happen in the final year. A large number of export activities like international trade fairs and work with traders attracted many more firms in Years 2 and 3 than anticipated, contributing to significant overachievement of the cumulative target by Year 4. The number of business linkages, measured through the number of signed and realized contracts generated through CSS interventions and its implementing partners, provides a clear understanding of the project’s impact on firms’ connection to new markets and opportunity for continued growth. In total, data from CSS records and the annual survey identified 306 contracts realized by 78 firms in Y4 (exceeding the Y4 target of 35 contracts). Of these, 44% refer to export contracts. Most surveyed firms, as expected, were not willing to share information and data on the total value of signed and realized contracts, however, based on those who did and in combination with other project activity surveys and records, CSS documented the total value of these contracts at $18 million. A majority of firms signed just 1-2 contracts (51 firms, for 64 total contracts), while 21 firms signed 3-9 contracts (99 in total), and five firms reported realizing 10-30 contracts (96 in total). Larger industry lead companies participating in the hub and spoke activities, hub participants, and Serbia Does Apples association members reported the greatest number of contracts realized. The number of private-sector firms that have improved management practices or technologies as a result of CSS interventions continued to grow in Y4. 105 private sector firm annual survey respondents have improved management practices or technologies thanks to CSS interventions, 47 of whom had reported improved practices in prior years, and 58 of which were new in Y4 (vs a Y4 target of 60). 96 of these firms are from the FV sector and 9 from

7 Although this report discusses interventions implemented during the reporting period (April 2020-April 2021), data for this indicator is reported by firms and covers the calendar year, as many companies manage their data in this way.

Annual Report Y4 12 other sectors. The majority of companies stated that those improvements were in the areas of planning, quality standards, marketing and sales. In total, 238 firms cumulatively have reported improved management practices or technologies due to project interventions to date (through April 2021). This is higher than anticipated by the end of Y4 largely due to better-than-expected results in Y2 and Y3. The survey data showed around 70% of firms participating in CSS capacity building activities in 2020 saw benefits from the activities, a good result considering the challenges presented by hosting these activities during the COVID-19 pandemic. It is also possible that companies might not immediately see the benefits of the capacity building but might see it in the following year. In market systems projects, it is common that as new services are developed, new indirect users are “crowding in” and may not be aware of how the services were initially developed. This is an important element of the market system approach and supports sustainability and local ownership. It can however make capturing the direct impact of Project activities on beneficiaries – or attributing results to a particular activity – more complicated. In other words, some respondents may not know that their improved activities are a result of CSS interventions, thus underrepresenting the number of firms benefiting from them. CSS will aim to capture indirect and direct positive effects on the market system in the outcome harvesting exercise to be conducted at the end of the CSS Project period of performance.

Sub-purpose 2: Strengthening business support systems

2-1 Networking index (score, scale of 0-100) – 41

Y1 (2017) Y2 (2018) Y3 (2019) Y4 (2020) Target 0 +4 points +4 +5 Actual 0 +6 points +4.9 - 4

In order to establish better linkages between key actors and stakeholders in the 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 academic institutions, traders, technologists, associations, financial consultants, and industry leaders with the capacity to service other, smaller firms in the market. Indicative results of these interventions are measured through the Networking index, an index (on a scale of 0-100) that measures firms’ participation in business associations (along with their satisfaction and the cost-benefit of membership), business trainings, technology training and collaboration with research institutions and academia. The score is based on survey data that measures firms’ level (and quality/satisfaction) of cooperation with associations and research institutions, as well as their participation in business, technical, and financial trainings. The networking index score for firms assessed in 2020 confirms that businesses have been struggling when it comes to cooperation activities, due to the strong negative impact of the Covid-19 pandemic on people’s ability to move, meet and gather. Covid-19 has also negatively impacted companies’ willingness to invest time and resources in new partnerships and innovative processes, as a majority of them were focused on short-term results and investing in managing the everyday uncertainties that Covid-19 generated related to employee health and business operations. This reality was reflected in a contraction of the networking index score by 4 points in Y4.

Annual Report Y4 13 The overall networking index score for target firms stood at 41, almost 10 points lower than in 2019. However, the index score remained higher, even during a pandemic, than it was at the start of the CSS Project (38 in 2018 and baseline level of 34 in 2017). Unsurprisingly, the networking index components most strongly impacted by the pandemic are collaboration established between businesses and academia/research institutes, and business skills trainings attended by company representatives. Both of these components were down by 3.5 points, de- creasing the overall networking index score. Scores for firms in the treatment and control group remained significantly different in Y4. While CSS-supported firms achieved a score of 41 points, firms from the control group have recorded a score of only 28 points – a decrease of 7 points compared to baseline. It is clear that CSS interventions have contributed to this difference – and therefore that a stronger network for market actors exists, contributing to their overall growth and success. For example, the most significant component contributing to this difference in scores is participation in technical trainings, which are generally organized and promoted by CSS partners. 39% of treatment group firms participated in training (45% in 2019), while only 22% of control group firms took part in such or similar trainings.

Sub-purpose 3: Resources for Enterprises Growth Mobilized

3-1 Percentage of companies using external sources of finance – 75%

Y1 (2017) Y2 (2018) Y3 (2019) Y4 (2020) Target 0 +4% +3% +3% Actual 0 +3% +2.5% +8.8%

3-2 Value of new private sector capital investment leveraged through CSS in 2020 – US$12.6M

Y1 (2017) Y2 (2018) Y3 (2019) Y4 (2020) Target – annual (cumulative total) 0 0 $10M $10M ($20M) Actual – annual (cumulative total) 0 $0.5M $14M ($14.5) $12.6M ($26.6)

In order to enable better understanding of and access to finance for firms CSS worked on two key activities during Y4: (1) financial trainings for SMEs, provided by advisory firms incen- tivized through performance-based fees (to support the DCA credit guarantee); and (2) development of alternative means of financing for most vulnerable micro farmers through revolving funds in partnership with local municipalities and private sector companies. Firm owners own resources still remain the dominant source of financing for the great majority of treatment companies; 88.5% of firms reported relying on it. However, three out of four treatment firms (75%) reported that they were using some sort of external source of financing as well – compared to a baseline figure of just 48% at Project start. Almost half of the firms (49.4%) (down from 52% in 2019) were using traditional banking financing. Other means of external financing were less frequently used – 11.5% of treatment firms reported borrowing funds from family and friends, while another 11.5% used funds provided by buyers, as value chain financing. Funds provided by investor capital were used by only 1.9% of surveyed treatment firms. Use of external funding notably increased compared to the previous year, which is not unexpected bearing in mind the influence of the COVID-19 on businesses, and increased availability of funding from the government and others to support them during this time.

Annual Report Y4 14 Sixteen companies responding to the survey (10.2%) stated that participation in project activities aimed at making new business contacts, working on new projects, dealing with new buyers, etc., resulted in new investments in 2020. The total value of investments according to CSS records and the annual survey is approximately $12.6 million, a substantial figure following the line of project activities scale-up. Around 85% of investments resulted from participation at Access to Finance Technical Assistance activities, and 15% from other project activities. Sustainability Analysis CSS activities are designed and implemented with the goal of long-term sustainability, incorporating two key sustainability factors: 1) capacity building of local partners and local ownership of activities, which is at the heart of the guiding theory of change, and 2) scalability and replicability of activities, in order to produce long-lasting and broad impact. The CSS approach to both factors is further elaborated in the following sections.

Compliance with the Theory of Change Interviews conducted with a majority of CSS’ Project Partners confirm that CSS’ approach is in line with the principles and values outlined in the theory of change. These interviews also provided illustrative examples of the key characteristics of CSS’ approach based on guiding principles of the theory of change: > Building Local Ownership –According to the interviewed partners, the CSS approach is characterized by room for agreement and flexibility and by transfer of know-how and de- voted technical assistance. Nearly all interviewed partners stated that the initiative/activity they have participated in was developed through iterative cooperation with the CSS Project, that the original idea was in their own interest and not imposed by the CSS team, and that they participated in each step of the process and that they have intensively benefited from the knowledge transfer from CSS team or its consultants. > Market Orientation – CSS has invested significantly in shifting Serbia’s traditional and deep-rooted “resource-oriented” paradigm towards a “market-oriented” one. USAID CSS has worked only with firms and stakeholders that are market-ready or could become market-ready adhering to the market-driven partner selection principles. This strategy was supported with grants and subcontracts in the case where deliberate targeting of underdeveloped areas or investments in innovation were needed. > Non-financial Support/Incentives – The majority of CSS’ partners stated that CSS expertise, brand image, and devotion were the key elements of support and that funding was not the main reason for collaboration with the Project. For example, Lukowa considers that USAID’s brand significantly helped them to successfully organize their academy and attract students. AgroNET stated that a key success factor is reflected in the Project’s ability to organize university collaborations for know-how transfer between UC Davis and the Faculty of Agriculture. > Strengthening Relationships and Communication - Activities that built trust and strengthened links among stakeholders along the value chain, academia or the GoS were also crucial elements of CSS support to partners. For example, CSS has worked with and supported DM to develop the network of local suppliers of specialty, organic products, bringing together Serbian Development Agency (RAS), Serbia Organica, and the Faculty of Applied Arts. This pilot set an example for the rest of the industry on how to set up collaborative networks to assist SMEs access retail markets.

Annual Report Y4 15 Scalability and Replicability of Activities In addition to the above-mentioned principles to ensure sustainability, pilots tested the potential for scalability and replicability of project models. Key drivers for scalability of interventions include: > Local trade shows: Organizing local, high-profile trade shows have brought international buyers to Serbia, allowing a much greater number of Serbian (and regional) firms to access new B2B opportunities and to learn about the latest market trends and developments. This is particularly the case for AgBg, which has massive potential due to its partnership with FruitNet (a leading EU publication on the F&V sector and lead partner of Fruit Logistica). This show, held online in 2021 due to COVID-19, is expected to host more than 100,000 visitors from all over the region in 2022. The Belgrade Food Show (BFS), also supported by CSS, is a smaller and more local trade fair that targets the specialty food segment, and has already become self-sustaining. Events such as AgBg, BFS and Prokupac days serve as the key platforms for scaling up project efforts (i.e., other industry actors adopting project models/solutions). > Cooperation with retail: The DM Incubator (dm drogeriemarkt) proved to be an important catalyst for encouraging the retail sector in Serbia to support local SMEs. This approach allowed 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 reported upgrades or improvements in manufacturing and lab equipment, innovations, packaging, and/or operations, which continue to have positive effects. 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 – DM expected revenues of approximately $150,000 in the first year, but this was significantly surpassed, reaching $180,000. They stated that they plan to continue with the activity. Market replication of this model is already taking place, as Coca Cola HBC Serbia, Roda Market and Lidl have implemented similar interventions (“We are coming from the South”, “Serbia’s Super”, “Small Craft, Big Passion“) after the CSS pilot. > Cooperation with Industry Leader Companies (ILCs) by integrating smallholders and local cold storages while improving production and marketing practices, and developing new high-value products. For example, three companies that have been linked to one of the biggest buyers in the world, GreenYard, have started initially with trading smaller quantities of blueberries. Over the last three years, this has been expanded to plums, peppers, and cucumbers, greatly increasing business opportunities for Serbian SMEs and integrating the substantial number of farmers into professional, EU market-oriented supply chains. These models were the most important part of the conference discussions at last year’s AgBg. > Institutionalization of a market solution with the GOS RAS (Development Agency of Serbia) In January 2021, in close cooperation with CSS, RAS launched a program aiming to improve the export capabilities of domestic companies from the food sector. The RAS Program was valued at $1.5 million and up to $105,000 per company, utilizing íncubator’ type methodology established by CSS to build cooperation between sector stakeholders. In June-July 2020, CSS organized working sessions with RAS employees to transfer experiences, and thus make this approach available to a much greater number of SMEs in Serbia. > Professional Industry Training: AgroNET continues to develop and implement industry- specific, short-term professional development courses based on best practices from the Uni- versity of California Davis (UC Davis). After a successful first year of implementation, continued cooperation between CSS, Chamber of Commerce, and AgroNET permitted course scale-up, expanding the number of firms that may benefit from this initiative. This

Annual Report Y4 16 initiative promotes a viable model for continuous learning that enables SMEs in the food sector to overcome human resource challenges. It also strengthens the country’s specialized knowledge to support business and industry needs.

Collaboration, Learning and Adaptation (CLA) CLA, a framework designed by USAID, helps to ensure that “programming is coordinated with other development actors, grounded in evidence, and adjusted as necessary to remain relevant throughout implementation”. In the age of coronavirus, CLA has been more relevant than ever, as it provides a framework to respond to challenging circumstances that make program adjustments necessary. The COVID-19 crisis has brought many challenges to regular office work. Before the pandemic, the technical team was used to Learning occurring naturally, informal weekly coordination meetings in the conference room, having project partners as frequent guests in the office and informal conversations among the staff in the corridors or during lunch break. Frequent and consistent Collaboration with project partners and stakeholders happened during meetings in the office, at their companies’ premises during field trips, and during regular office and out- of-office CLA events in the field. CLA events also enabled the Project to practice Pause & Reflect in a group setting other than regular weekly meetings. Thanks to the introduction of CLA from the inception of the project, applying Adapt principles during project implementation where deemed necessary, and planning the work for the next year, it was not difficult for the project to quickly adapt to new circumstances during the pandemic. Staff began telecommuting with no or very little disruption to the Project work. The project continued to focus only on the activities that would be realistically sustainable, and most importantly, would fit with or contribute to successful efforts that other teams on the project are implementing in order to gear interventions towards scaling up successful pilots, finishing and evaluating the ongoing ones, and monitoring (and stimulating where needed) crowding-in of market stakeholders around successful project interventions. The team enacted the Risk Mitigation Plan, with weekly monitoring on the project’s intervention progress and monthly updates to Risk Mitigation Tables shared with USAID, and conducted evaluation of the pandemic’s effects on the intervention implementation dynamics and planned events. Some activities, especially trainings like AgroNet, as well as some conferences like AgroBelgrade were switched to an online format. Collaboration among project partners and stakeholders has moved online exclusively during pandemic peak waves and government-imposed lockdowns. Periods with lower risk have allowed the Project to operate both online and offline but in full observance of safety guidelines and social distancing. CSS decided to close its field offices, and the team traveled in-country and continued to conduct activities strictly in line with the GoS proscribed public health measures, providing direct mentorship services to some beneficiaries, among other activities. The team was able to implement field visits and trainings as planned between the lockdowns with some additional safety measures put in place. This has allowed CSS to continue partner engagement and activities despite new challenges. Many activities had to be delayed but very few were completely abandoned or canceled, like the collaboration with Oregon State Univer- sity, and difficulties in travel between the US and Serbia exactly a year ago. The project continued to use the Formal and Informal CLA approach, but the regular format of annual CLA events was not undertaken due to pandemics. CSS used smaller-scale workshops in the office in December 2020 and February 2021 to evaluate activities so that learning con- sistently informed planning and implementation and write a new work plan.

Annual Report Y4 17 The formal CLA approach encompassed using valuable inputs from program reports, while the informal CLA approach was more focused on adaptive management principles and innovations, regular weekly updates and discussion meetings to reinforce continuous learning. Con- sistent online meetings with partners, industry, and other international partners, sharing results to ensure building trust and community of support for Project activities, even in the time of crisis, the quick adaption of activities and accommodating to the new circumstances in the annual workplan for the project extension to the 2021/2022, have been some of the characteristics of the CLA during the pandemic. Open, transparent and continuous communication with USAID during the pandemic also ensured a strong understanding of the nature of facilitation activities for the adaptive approach to evolve into strategic learning.

Technical Activities Y4

Access to Markets

Annual Highlights

✓ Despite the Covid-19 crisis, five industry leaders backed by CSS successfully completed the season and recorded impressive results – achieving additional sales of $6.9 million and 50 new contracts with foreign and domestic buyers. The lead companies thus successfully ended this season by providing market access to nearly 420 small farms, primarily from underdeveloped parts of the country. These companies have announced plans to expand the cooperative-contract farming (hub & spoke) business model, which will support the inclusion of new smallholder farmers in their value chains. Some of the large Serbian export companies have expressed readiness to implement a similar business model in underdeveloped parts of Serbia (e.g. PDM Agro Fruit). ✓ Two industry leaders have introduced digital solutions on small farms and in their production processes, setting a trend in the use of ITC in agricultural production and processing. Delta Agrar can be considered a pioneer in this effort, as no similar software platform has ever been used on small farms in vegetable production. This change allows for full implementation of food safety processes, traceability, and most importantly, increased access to high-value export markets. This effort was well received by the mainstream media and social networks, with visibility in six media outlets. ✓ A new, improved version of the professional platform for exporters of fresh fruit from Ser- bia has been launched under the joint brand Serbia Does Fruit (www.serbiadoesfruit.com). Cur- rently, 23 companies are members of the platform, among which are the leading Serbian exporting companies. Thanks to the advanced services provided by SDF and members’ positive impressions, SDF expects to expand the platform and access for new members. ✓ Six Serbian export-ready berry companies linked with 10 potential EU fresh berry distributors. As a result of this activity, in 2020, Serbian companies - all members of the SDF - started exporting their products (mostly blueberries) to Germany (over 300 tons), a significant increase compared to 2019 (just 8 tons). Berry companies also had access to new markets such as the UK, Poland, and Denmark, increasing the number of Serbian blueberry export markets from 13 to 22 from 2019 to 2020. The total export value of fresh blueberries from Serbia in 2019 was $10.9 million, while in 2020 it amounted to almost $20.3 million. ✓ The Center for the Development of Innovative Products Made from Oblachinska Cherry has assisted Serbian food producers to create and market 18 new, high-value food products made from the Oblachinska cherry and bring them to domestic and international markets. Producers realized approximately $370,000 in sales after just 3 months of the products’ launch, opening

Annual Report Y4 18 additional sales opportunities for Serbian sour cherry producers. Most importantly, finished products from this traditionally low value, bulk-export product will finally be available in retail markets. ✓ In 2020, the Project carried out several activities to systemically support the Serbian wine segment, focusing on a specific autochthonous wine variety, Prokupac, to improve country and sector recognition and stimulate investments. The major promotional event in October 2020 was the fifth Prokupac Days event, which included a series of high-profile promotional and educational wine-related events. In the last quarter of 2020, compared to the same period in 2019, wineries and distributors recorded an increase in the number of bottles of Prokupac sold by 30 to 60%, while in the HoReCa system this increased from 15% to 50%. Some restaurants have included wine from Prokupac in their permanent offer.

Since the beginning of the Project, CSS and its partners have focused on the opportunities for positive changes and growth of the industry, targeting market diversification and reputable buyers. The goal is to improve the perception of Serbia as a supplier in high-value markets, while increasing the confidence and capacity of Serbian SMEs to compete in the most demand- ing markets. At the same time, each of the F&V industry sectors brings with it specifics challenges. The fresh, frozen, and specialty food segment (includes wine) each require a separate approach and implementation strategy.

1. Fresh F&V Segment Although the fresh segment of the industry, primarily fruit, has developed noticeably in the past decade, it is just scratching the surface of its potential. This highly profitable segment has grown mostly as a result of apple and other fruit exports to Russia. The EU market, the largest in the world, remains largely untapped, and CSS targeted integration with the high-standards EU distribution systems as a priority intervention in order to trigger a new wave of change in the Serbian market system. Initial pilots were launched to: ✓ Establish a professional, market-driven exporting association of fruit producers that would serve as a window to the EU market for Serbian firms, as well as the doorway into Serbia for EU buyers; ✓ Through the association, diversify and enter EU (and regional) markets utilizing similar product export groupings (apple, blueberry, etc.), and attract large distributors to start sourcing from Serbia so the country becomes visible and recognized in the EU market; ✓ Establish effective models of production organization with smallholders (hub and spoke); and ✓ Build up the emerging fresh berry and vegetable segment by working with pioneer- ing Serbian lead firms to improve fresh supply chain logistics, lead production transformation from traditional to modern (new varieties, greenhouses, hail nets, etc., so production is protected from changing weather patterns) and establish good-practice examples for the rest of the industry.

Annual Report Y4 19 Industry Lead Companies and Market Integrators (I2-8) Hub and Spoke: This activity supports aggregative business models (i.e. forms of cooperative- contract farming, aka Hub & Spoke), par- Services of the Hub & Spoke model ticularly in underdeveloped parts of Serbia, to create opportunities for a larger group of 1) Production technology and knowledge transfer. smallholder farmers/producers to access 2) Inputs and pre-financing options. high-value domestic and international mar- 3) Risk management and insurance options. kets and adopt market standards, efficiently 4) Logistical support, transparent price policy and use inputs, and adopt new technologies. guaranteed buyout of outputs (final products). In early 2020, the Project partnered with 5) Food safety and quality standards. three industry-leading companies (ILCs) 6) Contemporary traceability and management from the fresh F&V segment to expand and tools (software solutions). improve the model. The Project worked 7) Advanced technologies/varieties that lead to with Delta Agrar, Pureberry, and Agro Bel better performance on markets. System to integrate more than 90 smallholder farmers, particularly in underdevel- 8) Access to markets through development of re- oped parts of Serbia, into supply chains that lations with existing and new international buyers would allow them to access high-value do- and defining production and marketing plans for mestic and international markets. The ulti- the value-chain. mate goal was to develop an equitable and modern cooperative model that followed the example of previous successful pilots such as the RZ Agro and Brestovik hub & spoke models in years 2 and 3. Simultaneously, other prospective lead firms, specifically those working with fresh berries, were also assisted to establish business relationships with new customers in the EU. These efforts presented an intensive scale-up in the number of firms that were being linked to high-value buyers, and this topic was also extensively discussed during Agro Belgrade. It is expected that more Serbian firms in the coming years will follow the model to link to major EU markets. As a part of the Project’s activity, ILCs have been providing comprehensive advisory support to partner farmers, including the implementation of new production technologies and food safety practices, even throughout the adverse conditions caused by the COVID-19 pandemic. Agronomists opted for safe training alternatives involving individual on-site field visits and training. Close cooperation with institutions such as MoA advisory services, cooperative associations, and technology companies is critical in this process. The table below outlines trainings offered by ILCs to partner farmers in the fresh F&V segments.

Table: Trainings for Partner Farmers by ILCs – Fresh Segment Industry Number of farmers integrated “One-on-one” training sessions/visits Group Leader (in total) trainings Delta 35 farmers and 2 cooperatives 28 (production operations and food safety), 10 ITC 4 Agrar trainings (software implementation) AgroBel 31 berry growers (20 new) At least 3 individual trainings per household per season 2 System by AgroBel agronomists. Pureberry 40 (21 new, 5 cucumbers and 16 At least 2 individual visits per farm per season by Pure- 4 pepper producers) berry agronomists.

Annual Report Y4 20 Delta Agrar: Delta Agrar is the largest Serbian F&V production, processing, and related operations agricultural firm, and thus has high potential to integrate producers and create path- ways to new export markets. Working with the Project, Delta Agrar successfully established an innovative hub & spoke model in the vegetable supply chain, with a focus on digitalization and high-value production on small farms. Delta Agrar introduced growers to a digital platform, AKOLogic, (www. akologic.info) that Education for Delta Agrar vegetable cooperants in Leskovac and preparation of the greenhouse allows for production traceability from crop to consumer, and enables participation in worldwide markets. Young leaders

Delta Agrar’s Hub & Spoke model results:

✓ 35 small growers and two cooperatives were trained and integrated into Delta Agrar’s supply chain. ✓ For the first time, Delta Agrar commenced sales of fresh vegetables to the United Arab Emir- ates (UAE). ✓ After successfully completing negotiations with the German-based supermarket chain Lidl, Delta Agrar began selling fresh produce in Serbia and the region. ✓ Delta Agrar signed contracts with the Hungarian branch of Auchan, a multi-national retail con- glomerate, and Greenyard, one of the largest fresh produce distributors in the EU. ✓ Delta Agrar exported 1,600 tons of fresh F&Vs produced by beneficiary farmers and valued at $1.38 million; F&Vs were distributed to six EU countries and two countries from the Western Balkans. ✓ At the end of December 2020, Delta Agrar opened a new logistics and distribution center in Nova Pazova (“The World of Freshness”) to support larger groups of cooperative farmers in delivering their products for further distribution to domestic and export markets.

(https://mladilideri.rs/) were engaged to assist small-scale farmers to adapt operations to the online platform. This cloud-based tool ensures the use of a food safety system, GLOBAL G.A.P. certification, and transparency across the value chain, as well as “Zero Residue” standard with their cooperative farmers, the key to environmentally sustainable production and to access the highest value markets This innovative activity will be a key topic of discussion during next AgBg in 2022.

Annual Report Y4 21 Pureberry: Pureberry partnered with the project during years 2 and 3 to initially become integrated into the Greenyard (large EU distributor) supply chain for blueberries. Since their initial delivery of blueberries, in Year 4 Pureberry became an official project partner to diversify its portfolio by including fresh peppers, cucumbers, strawberries, plums, and apricots, effectively scaling up its efforts and establishing a very successful and unique model for the rest of the industry - showcasing the importance of working with standardized, high-value EU markets/buyers. The company's supply network has expanded to almost 80 small farmers (40 of them newly integrated) from the Smederevska Palanka, Smederevo, Mladenovac, Sabac, and Kraljevo regions. The company’s team of experts provided all farmers with training and GLOBAL G.A.P. and GRASP certification. Pureberry also launched cooperation with two retail chains: Ahold Delhaize (Maxi), a large foreign retail chain operating in Serbia, and Aroma, a smaller domestic retail chain, as well as with four internationally significant customers: Greenyard, Coop Norge, Hortim International, and Pureberry Fruit Rouges. In the final stage of this activity (Q4 of Y4), Pureberry reported investing over $70,000 in the latest machines for packing fruits and vegetables. The company also generated $1.9 million in revenue and sold nearly 600 tons of various F&Vs during the same year. Pureberry, along with other fresh berry exporters, will be discussing their successes at Agro Belgrade and will participate in AgroNet trainings to drive learning for the rest of the industry. The model can be easily replicated by other F&V producers to increase sales and exports while providing small- scale producers a chance to stay on their land and sustain their families. AgroBel System: AgroBel was also a part of initial Pro- ject efforts to start blubbery exports to the EU (Greenyard). In Year 4, through a formal partnership with CSS, AgroBel expanded their production network by 20 new berry farms, firms, and agricultural cooperatives, certifying more than 50 hectares of production with Global Gap and producing over 245 tons of fresh berries. Market challenges caused by the COVID-19 pandemic disrupted export in 2020 (20 tons exported, valued at $142,000), but AgroBel significantly increased sales in the domestic market compared to prior years, selling $744,000 (137 tons) worth of fruit to Ahold Delhaize and Veropou- los, two leading retailers in Serbia. In total, AgroBel increased sales quantity in 2020 by 105,000 kg, two times Blueberry picking in Gokcanica more product compared to 2019. AgroBel continues to expand cooperation with farmers and scaling up its production: the goal is to produce 205,000 kg of fresh berries in 2021 and expand sales to the EU market.

Scaling up: Assisting berry growers to open new markets

Building on the success from Brestovik (Y2) and Pureberry and AgroBel (Y3 and Y4), each of whom went through a process of learning about EU markets and meeting important EU buyers (who helped confirm these firms were ready for them), and specifically targeting blueberries, the Project identified (in collaboration with Serbia Does Fruit platform) six new export-ready berry companies (Popić Blue- berries, Berry Care, De la Tero, Sirmium Fruit, Berry4U, and Prima Blueberry) to link them with potential EU fresh berry distributors. In early 2020, all six Serbian companies were put in direct contact

Annual Report Y4 22 with 10 potential foreign buyers from UK, Germany, Austria, Netherlands, and Hungary through online communication.

Along with these efforts, the firms were required to improve their value chains and introduce quality standards in production (Global GAP, GRASP, etc.). These efforts have yielded notable results: ✓ One of the largest fresh fruit companies in the world, Total Produce, has confirmed that it has started doing business with the Serbian companies. ✓ A Project beneficiary, Berry4U from Koceljeva, has started exporting to Herbert Vidmann GmbH, the largest German importer of blueberries. ✓ In 2020, Serbian companies exported more than 300 tons of blueberries to Germany, while in 2019 the total export of blueberries to this country was insignificant (8 tons). ✓ Exports of Serbian blueberries to the UK doubled, reaching 126 tons in 2020 compared to 76 tons in 2019. ✓ Two new markets have been opened for Serbian blueberries - Poland (207 tons in 2020 compared to 2 tons in 2019) and Denmark (30 tons, for the first time). ✓ The number of export markets for Serbian blueberries increased from 13 in 2019 to 22 in 2020. ✓ The total export of fresh blueberries from Serbia in 2019 amounted to $10.9 million, while in the first nine months of 2020 it amounted to almost $20.3 million. The most important success of this activity is, however, that Serbian firms are not exporting bulk products to Russia and Netherlands, but are now active clients all over the EU distributing small high- value packs of produce. All of these efforts will be activities showcased and discussed during AgBg 2022.

Mentoring Program for SMEs and Cooperatives: Responding to the mid-term report conducted by USAID, CSS expanded its support for smaller firms in rural areas, currently without access to foreign buyers through a mentoring program. The program was focused on building firms’ capacities and preparing them to participate in future B2Bs with international F&V buyers and become integrated with more lucrative markets. Mentoring included 26 training sessions from May to Sep 2020 for 13 SMEs and cooperatives, all in underdeveloped regions of Serbia. The Program consisted of modules such as export-oriented business models (Hub and Spoke), steps towards global markets, standards/Global GAP, marketing, and trends in F&V packaging. The Project focused on the most marketable/profitable crops including berry fruits, vegetables, and organic products. CSS also provided advice on available financing sources, such as state subsidies, IPARD funds, and the USAID (DCA) Guarantee Scheme. The table below contains a list of the beneficiary entities.

Firm/Coopera- Location No. con- Type of farms inte- Final F&V products and markets tive tracted grated farmers Macva Plod ZZ Bogatic 120 Vegetable producers Fresh produce, domestic market TOP Star Agro Miokovci 6 Raspberry and black- Fresh berries, domestic market and export doo berry producers Triokooperativa Krusevac 450 Fruits & vegetables Mostly export doo Maks doo Blace 60 Fruits & vegetables Both domestic and international markets Panici doo Brus 70 Fruit production Fruit processing, both domestic markets and export

Annual Report Y4 23 Firm/Coopera- Location No. con- Type of farms inte- Final F&V products and markets tive tracted grated farmers Tempo foods doo Trstenik 150 Fruits & vegetables Fresh and processed F&V, both domestic production and international markets Kosmaj Agrar ZZ Mladeno- 70 Fruits & vegetables Fresh vegetables (gherkins and peppers), vac production plum and sour cherry Arbat fruits doo Brus 100 Fruit production Fresh fruit for processing (osmotically dried fruit) Majori SV PR Leskovac 50 Vegetable production Fresh vegetables, domestic supermarkets Zelena Zvezda Leskovac 50 Vegetable production Fresh vegetables for export and domestic ZZ markets New Economy Nis 20 Fruits & vegetable Fresh and processed F&V for the domestic South PR production market Radulovic MS Vranje 70 Fruits & vegetable Fresh and processed F&V for the domestic doo production, and forest market fruits collection Garić promet Šarlinci- 15 Vegetable production Fresh produce for domestic supermarkets Leskovac

Industry Associations (I2-3, I2-4) Since its launch, the Project has been working closely with industry associations. CSS enabled several foreign market research studies for specific products to strengthen associations’ capacities and level of expertise and organizational skills. During Y2 and Y3, the Project piloted activities with professional associations: Serbia Organica (SO), the National Association of Serbian Prune Producers (NAPP), and Serbia Does Apples (SDA). The activities stimulated the participation of member companies in joint marketing activities (B2B, fairs, trade missions). The Project also assisted in brand development (e.g. Serbia Does Fruit – SDF) and improving the visual identity of the associations. The SDA association successfully professional- ized services, conducted market research, and organized B2Bs/trade missions and networking with global professional organizations and the media. The SDA serves as an example to other associations, while SDF has the ambition to grow into a B2B platform and present Serbian fresh fruit producers to world markets in a modern way. Capacity building of industry associations Serbia Does Apples Association: In 2020, SDA member companies continued to successfully diversify their export markets and increase sales. Five years ago, almost all Serbian apple exports were directed to the Russian market. However, since 2019 more and more apples find their way to countries such as the United Kingdom, Romania, Hungary, UAE and other Gulf countries. This trend of market diversification continued in 2020. Serbia became a Top-10 largest apple supplier in the UK in the first quarter of 2020, delivering 1,600 tons of apples, 67% more than the same period last year. As a comparison, in 2008 Serbia delivered a mere 4 tons of apples to the UK. In the first three months of 2020, Serbia increased exports to the UAE by 16 times and delivered 936 tons of apples. Serbia also penetrated the Malaysian market, delivering 284 tons of fresh apples in January-March 2020. The successes come after fewer than three years of continuous and systemic work by the SDA and its members. As a result of these successes SDA built a strong reputation within the industry and attracted more companies - Apple World and Vija

Annual Report Y4 24 product joined in late 2019, Nasa Jabuka in 2020, and most recently, Frueko in spring 2021. After becoming a member of the World Apple and Pear Association (WAPA), SDA was hon- ored to organize the Prognosfruit in 2021 - WAPA’s central annual event. The event was postponed to 2022 due to COVID-19, but the SDA and Serbia are still expected to host it.

SUCCESS STORY: Media Reports on the Successful Diversification of Export by Serbian Apple Industry

“Serbia continually increases sales of apples in Great Britain and the Middle East, while it sells less and less to Russia,” international experts reported in late May 2020 during the First International Online Conference “Apple Predictions.” The conference was organized by EastFruit, with the support of the UN Food and Agriculture Organization (FAO) and the European Bank for Reconstruction and Development (EBRD), the Ukrainian Fruit and Vegetable Association (UPOA), the international analytical project “Fruit-Inform” and the Federation of Agricultural Producers of Moldova (FARM).

Throughout 2020, SDA had several appearances in mainstream Serbian media. One of the most notable interviews was on the TV show “Rodno i Plodno,” a national syndicate program focused on agriculture. The show hosted Mr. Gojko Zagorac, President of SDA, who reported on the excellent 2020 production season and that the COVID-19 pandemic did not have a significant impact on this year’s total apple production. Mr. Zagorac stated that SDA has intensively been working to diversify apple exports to new international markets. “Serbia’s apple industry is no longer entirely dependent on the Serbian fresh apples export and positive trend in market diversification. EAEU (Russian) market,” stated Mr. Zagorac, and added, “SDA members recently entered new markets such as the EU, the United Kingdom, the Middle East, some Asian and North African markets.”

Serbia Does Fruit Platform: SDA’s success demonstrated a pathway for a broader sector platform - “Serbia Does Fruit” (SDF). In 2020, two working sessions were organized for fresh F&V segment companies, including fresh berry producers working with CSS. The workshops, entitled "Internationalization and promotion of Serbian fruit producers and exporters under the brand Serbia Does Fruit,” attracted over 15 companies from the fresh fruit segment, 2 companies from the frozen fruit segment, as well as 4 providers of inputs and services for the fruit industry. Each expressed great interest in actively participating in joint efforts and making the SDF platform sustainable by covering membership fees. The SDF website, (www.serbiadoesfruit.com) is a platform to present and promote all member- companies internationally, where foreign buyers, traders and distributors can explore

Annual Report Y4 25 members’ offerings, quality standards, and production capacities. In 2020 the website was significantly upgraded featuring advanced members-only services. Currently, 23 companies are presented on the SDF site, however, these companies’ value chains are made up of over 100 smaller firms and many more farmers, extending the benefits of the platform well beyond the member companies. It is expected SDF will soon enroll more members, as current members start to benefit from the services provided by the platform. SDF proactively communicated and advertised in relevant international media and through social media. In the last quarter of 2020, SDF published articles about the Serbian fruit industry in the industry-leading EU fresh produce trade magazine and online news platform Eurofruit, a media with a monthly online read- ership of over 19,000 (http://www.fruitnet.com/eurofruit/article/183045/serbia-a-country-of- fruit; the article was viewed 1,658 times). SDF also advertised on Fresh-Plaza.com, the leading online meeting place for the international fresh produce industry.

2. Frozen F&V Segment The frozen F&V sector, or 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 identified a) consolidation of Serbian processors around the best exporters with access to higher-value markets (finished/retail-ready products, private label and organic); and b) diversification into other crops and products (organic) as key improvements to further strengthen the sector competitiveness.

Industry Lead Companies (ILC) as Business Integrators (I2-8) Unlike the fresh F&V segment, the frozen F&V processing segment is well integrated with the EU markets, though still suffering from low value add. This is due to the fact that the sector is made up of an incredibly high number of 2nd and 3rd tier intermediaries, and producers still work in traditional ways, making limited profits from their efforts. The project thus targeted the best lead firms in the sector to drive consolidation of supply chains and production diversification (vegetable farming, organic production, etc.) that would provide more opportunities for small farmers. Pilots during Y2 and Y3 with prominent Serbian frozen F&V exporters such as Sirogojno, Lukowa, Fortis, and Van Drunen, showed that organic production holds the highest promise for completive growth in this sector. In Y4, the Project scaled up its work with two companies that have been strengthening and incorporating organic farmers from devastated areas in southern Serbia into their value chains - Menex and Frutorga.

Table: Trainings for Partner Farmers by ILCs – Frozen Segment Industry Number of farmers integrated “One-on-one” training Group Leader (in total) sessions/visits trainings Menex (frozen) 272 organic fruit growers (108 new) 23 trainings and 15 ITC trainings (soft- 7 ware implementation) Frutorga (frozen) 37 berry and fruit growers (10 new) 8 trainings 2

Annual Report Y4 26 Menex d.o.o., Krusevac: Supported by the Project, Menex, one of the leading Serbian exporters of frozen organic berries and located in Krusevac, established partnerships with more than 107 new farmers from several municipalities in the Rasina and Toplica districts. These farmers produce organic strawberries, raspberries, blackberries, cherries, and plums as well as several berries collected from nature (forest blackberries, blueberries, elder flower etc.). Menex is providing an advantageous package of services and inputs to their farmers. This includes trainings in organic production and an introduction to the highest standards in the food industry. For example, in addition to EU certified organic, Menex and the farmers adopted standards required for the North American market (NOP standard), Swiss market (BIOSUISSE standard), and other similar standards in the field of food safety (GLOBAL G.A.P.) and social standards (GRASP and KRAV).

To improve growers’ competitiveness and Implementing ITC to Improve Operations raise their level of knowledge about or- and Marketing. Menex introduced a self-devel- ganic production, Menex conducted train- oped software solution to monitor the production, ings that covered a range of topics, includ- processing, and sales of fruit. The software was fi- ing: organic fruit production; pest and dis- nalized and tested with over 270 growers in 2020. ease control for blackberries and raspber- In addition to the great advantages it brings in over- ries; food safety and hygiene measures; all better organization, savings on time of opera- and best practices related to fruit cultiva- tions, elimination of errors due to the human factor, tion, packaging, and storage. and better performance of farmers, this new technology assures foreign clients of high product qual- Menex reported (at the end of Y4 Q3) that ity, and provides field-to-shelf product traceability. their farmers produced 1,272 tons of or- It also serves as a great marketing tool to convince ganic fruits and successfully exported 372 foreign customers of the high food safety standards tons, valued at $915,000 – a season record practiced by Menex cooperative producers. for production and sales. Sales are esti- mated to have increased 30% compared with the 2019 season. Menex started extensive sales this quarter with 10 existing customers from EU countries and one cus- tomer from Vietnam, as well as with 9 new customers from the EU with whom it has contracted sales cooperation this year. Menex is committed to further expanding and developing its cooperative fruit growers in 2021, which indicates the long-term sustainability of this activity, and will showcase this as a case study during the upcoming Agro Belgrade fair. Frutorga d.o.o, Prokuplje: Following up on recommendations from the USAID mid-term evaluation, the Project directly engaged one emerging firm from Prokuplje, Frutorga. The firm has strengthened its position as the main producer of organic fruit in the underdeveloped part of south Serbia, and with CSS they added 10 additional growers. In 2019, Frutorga processed 470 tons of organic cherries and in 2020 they have already processed 750 tons , while also buying organically-produced strawberries for the first time. At the beginning of the season, all subcontractors received agro-inputs in the form of seedlings, irrigation systems, mulch foils, and other necessary materials for organic strawberry production. Despite problems with an extremely high amount of precipitation this season, they managed to offer 10 tons of fresh organic strawberries to the EU market (valued at $660,000).

Annual Report Y4 27 As a part of this activity, the company also invested $250,000 in a modern deep-freezer refrig- erator with a capacity of freezing 10 tons of fresh fruits per day (via bank loan). Frutorga also invested in new washing machines, modern screening, packaging, and transport equipment, as well as additional rooms for workers – which was also put into operation this year. This year the entire production process is certified according to the EU and domestic standards for organic production. In part due to CSS support, they were able to obtain additional development funding from the EU. Marketing and processing capacity in East and South Serbia still remains low and examples like this one are excellent showcases for not only building a strong infrastructure and marketing base but also building a lending market in areas where banks rarely operate.

Industry Associations (I2-3) The Union of Cold Storages: Parallel with lead firm pilots, the Pro- ject also worked with the Union of Cold Storages to improve the association’s professional management and develop market research capacity. The Union comprises 30 members for whom the new professional manager has showcased the market research methodology and provided important information on trade trends - currently, about 85% of Serbian frozen berry exports are concentrated in the EU, so the particular focus was placed on the Asian market: Japan, China and the Republic of Korea. During the “21Food Online Expo,” association members had B2B meetings with potential partners from Asia, but concrete sales were postponed due to customs tariffs reconciliation between Serbia and Asian countries which will Innovative berry harvest- be resolved shortly. ing machine prototype. The Union also mobilizes members to work on addressing the most pressing current problem - the workforce shortage. This shortage presents various challenges; for example, the raspberry harvest is very difficult to organize. Therefore, mechanical fruit harvesting was a priority for Union members, because it can significantly lower production costs. Technical documentation for an innovative berry harvesting machine was developed and the machine was successfully tested in blueberry fields in the summer of 2020. Testing is expected to continue in raspberry orchards in the summer of 2021 and it will soon become com- mercially available.

Agro Belgrade Food Show (I1-6) AgroBelgrade (AgBg) is an international trade fair organized in Belgrade, Serbia to connect Serbian and regional firms with global markets. AB showed huge potential and in its first year (January 2020) demonstrated itself as the most important regional event for the fruit, vegetables, and wine (FV&W) industry: hosting 35,000 visitors from Serbia, the region, and abroad, 200 exhibition stands with over 500 exhibitors, and a conference with a total of 12 thematic panels, 50 expert panelists and over 1,000 participants. In March 2021 (Q4), due to restrictive measures caused by the Covid-19 pandemic, the organ- izers of AB fair decided to hold an online event, which was supported by CSS. The event was focused on education and dissemination of knowledge through an online conference that brought together 27 industry experts, high-level public officials, and private sector representatives from leading domestic and international companies. Participants had the opportunity to take part in four informative panel sessions focused on: 1) New perspectives on FV&W export markets; 2) The high potential of novel pome and stone fruit varieties in Serbia; 3) Current

Annual Report Y4 28 innovative models for financing agribusiness; and 4) Advanced growing technologies in the fruit and vegetable sector. The Deputy Prime Minister and Minister of Agriculture, Forestry and Water Management (MoA) Branislav Nedimovic, USAID Acting Mission Director Shan- ley Pinchotti, the Secretary for Agriculture of the City of Belgrade (CoB) Milinko Velickovic, and the Director of AB Vladimir Zivanovic opened the high-profile event. In addition to the conference, the organizer of AB event introduced B2B networking sessions for the first time and organized 16 networking business meetings between 19 Serbian fruit and vegetable producers and eight domestic and international exporters, retailers, and customers, including supermarket chains and fruit distributors. vegetables. Prior to the online conference, AB was intensively promoted through both traditional and online media. The event was covered by 20 media outlets and generated extensive positive media coverage with over 60 media references in national, regional, and local media. The event also recorded about 3,500 views on YouTube (see https://www.youtube.com/channel/UCsHJhhIe1tZ7CDiE-KZ-VSv). In addition to receiving technical and financial support from CSS, the MoA, and CoB, this year's event was supported by the Dutch Embassy and NLB bank. This broad-based support from public institutions, private businesses, and international development agencies is an indication of the growing long-term sustainability of the AB and a testament to the Project’s market-based systems approach. Going forward, the project will continue to increase the domestic and international capacity of the domestic FV&V industry and encourage new partnerships between domestic companies and international buyers and distributors through well-organized, local trade show events. Cooperation with USAID EDGE Project: Regional Online Confer- ence on ICT in Agriculture: CSS partnered with USAID’s regional Economic Development, Govern- ance and Enterprise Growth Project (EDGE) to organize a regional online conference on the use of ICT innovations in agriculture in August 2020. The event gathered more than 80 representatives from companies and panelists from North Macedo- nia, Bosnia and Herzegovina (BiH) and Serbia to discuss the importance Presentation of ICT solutions implemented by Delta Agrar - CSS's industry leader partner during the online and latest implementation of ICT in- conference. novations in regional agriculture and potential benefits for the agribusinesses and farmers. Keynote speakers included Jasmnka Var- nalieva, Chief of Party (CoP) of the EDGE project, Fedja Begovic, Deputy Chief of Party (DCoP) of the USAID Fostering Agricultural Markets Activity II Project (FARMA II), and Aleksandar Pavlovic, CoP of the CSS Project, who stressed the importance of organizing such events and that countries in the southwestern Balkans have quality traditional fruit and vegetable producers, but their holdings are very fragmented, and the level of technology and digitalization is often low. Consequentially, they lack efficiency in production and have difficulties in accessing the main fruit and vegetables distribution chains in Western markets. Presenters discussed the following topics: current level of digitalization in the Primary F&V Production in WB countries; benefits of applying precision technologies in agriculture in the Balkans; and Variable Rate Technology (VRT). Dusan Nikolic from Delta Agrar, a CSS Industry Leader partner, and Milorad Mandic from Avital Agro presented an ICT solution that is currently being

Annual Report Y4 29 implemented on more than 30 vegetable farms in Serbia in Delta Agrar’s value chain. This innovation, supported by CSS through a subcontract to Delta Agrar, enables the digital integration of a larger number of smaller producers. It can generate reports, providing full traceability of production and sales, and fortifies the overall security of the food supply chain, which is required by foreign customers. All panelists agreed that this event can serve as a starting point for increased regional cooperation and business activities where service providers and recipients have the opportunity to meet and discuss potential cooperation.

3. Specialty Food Segment Based on EU and global specialty food growth trends, CSS launched pilots addressing the greatest needs of the mostly micro-firms that operate in this sector – all resolving the issue of access to markets. Youth and female entrepreneurship played a particularly strong role in these efforts. Most firms from this sector operate in the gray zone and their market scale-up potential is rather limited, as the sector relies primarily on the domestic market. Exporting is rather difficult as specialty food markets are very competitive in every country, but some products, especially those with ‘healthy’ characteristics and/or made of unique, autochthonous varieties of F&Vs have an opportunity to successfully position in foreign markets. The Belgrade Food Show, the CSS-developed specialty food trade fair now sustainable in its second year, serves as a platform where various firms and market actors can discuss market opportunities and problems

R&D and Innovations in Serbian Specialty F&V Segment (I1-5) Retail in Serbia, now accounting for more than 50% of total spending in the country, is the goal for every specialty food producer in the country. However, with weak distribution systems, problems with economy of scale, and severe competition, most of the micro firms stand little chance to succeed unless assisted and supported by the retail and/or government through specific development programs. After the success of CSS-piloted Dm Incubator – the GoS, Busi- ness Support Organizations (BSOs), and retailers are increasingly recognizing the importance of supporting innovations in the food sector through systemic 360-degree, incubator-types programs. Significant examples are support programs provided by the Serbian Development Agency (RAS) specifically focused on this segment. Dm Incubator: The first retail incubator in Serbia, the Dm Incubator continued to support and invest in innovative food and beauty products developed by 14 alumni companies. Dm has continued its successful cooperation with the RAS and technology experts during the second phase of the dm Incubator, called the dm Incubator 2. Inspired by previous activity with CSS, in March 2021 (Q4) RAS launched a specially designed program to further support dm Incu- bator’s beneficiary companies by covering 50% of costs for production and marketing capacities, including (1) development and improvement of new, market-ready products, or (2) trade promotional activities in international markets (trade fairs, B2B meetings, etc.). The intention is to build beneficiary companies’ capacity to meet EU production standards and potentially sell their products through Dm drogeriemarkt network (3,349 stores in 12 European countries).

Table: DM Incubator 2 Companies that Applied for the RAS Special Export Oriented Program Company Products Place NISHA d.o.o. A range of organic products from forest fruits and mush- Belgrade (production in Crna Trava) rooms. Coquette d.o.o. liquid blush containing natural oils of apricot kernel, rasp- Belgrade berry, and blackberry originating from Serbia.

Annual Report Y4 30 Company Products Place Prefer Cosmetics Plant-based perfumes, perfume mist, aftershave lotions, Novi Sad d.o.o. and balms. BMD d.o.o. Organic dried mushrooms. Arilje Medeni vrcko “Veverko” cream consists of honey and ground roasted Petka, Kostolac d.o.o. hazelnuts. Vrtilari d.o.o. A range of premium F&V products. Mali Iđoš BioLitus d.o.o. Meals with organic cereals and fruits. Mošorin Ana Dolovac en- Organic fruit juices. Futog trepreneur

From September 2019 to August 2020, despite the COVID-19 lockdown, sales figures for the pilot dm Incubator products were higher than expected, reaching $300,000 with 73,000-plus units sold. Having been on dm’s shelves for less than a year, some beneficiary companies stood out with excellent performance and sales figures including Nisha, Crna Trava (organic certified producer of forest fruits spreads), BMD Arilje (organic producer of dried mushrooms, spices, and ready-to-cook meals), and Dolovac. DM also received new recognition for its dm Incubator success in the country. In May 2020, the retailer was presented as the winner of the Special VIRTUS Award by the Trag Foundation (Trag), for the most innovative project – the first retail incubator in Serbia. Since 2008, Trag recognizes excellence, innovations, and best philanthropic practices of companies and individuals. The VIRTUS award is the third for Dm Incubator, which previously received two national awards: the biannual National Social Responsibility Award “George Weifert” and the Serbian Association of Managers (SAM) award for contribution to the development of local entrepreneurship. Serbian Private Label Association: One of the best ways to enter retail is through Private Label deals. ENECA, a CSS partner, established the Private Label Training Centre - the first PL incubator in Serbia. The Project recognized the growing market potential of PL products as an opportunity to further strengthen the competitiveness of food producers in underdeveloped parts of Serbia and supported ENECA’s PL Training Centre, which assisted 10 companies and one cooperative to develop 24 new private label products (SKUs). Despite the COVID-19 crisis, two beneficiary companies from southern Serbia, Nisha (Crna Trava) and Black Grass (Vlasotince), successfully entered (June 2020) into an agreement with lead retailers—Lidl Ser- bia and dm drogeriemarkt (dm) respectively, to place their private label products in the domestic market. Nisha launched three new varieties of Organic Cold Fruit Tea in dm stores (blueberry tea, herbal mix, and elderberry and mint), while Black Grass introduced two improved traditional food products – pepper spread (ajvar) and chili pepper spread (ljutenica) in Lidl shops throughout Serbia. Supporting Innovative Industry and Genuine Serbian F&V Foods and Brands – Desing: Serbian autochthonous varieties present possibly the best opportunity for achieving market dis- tinction and success. Finished premium products, such as Serbian plum brandy, Ariljska raspberry jams and juices, Prokupac and Tamjanika wine, etc., coupled with geographic identification activities are starting to find substantial success in the market. One product, however - the Oblachinska Sour Cherry - although plentiful in production volume and quality, has failed to produce premium products that could be positioned in the market. The Project thus initiated the creation of the Center for Oblachinska Products Innovation with Desing, involving several key industry stakeholders while helping 12 domestic companies to

Annual Report Y4 31 develop new and original premium products based on oblachinska cherry. The high content of dry matter, a favorable ratio of sugars and acids, relatively easy pitting, good fruit firmness, and extremely high-quality aromatic taste make it a variety of exceptional quality.

List of companies supported through the Center for Oblachinksa Products Innovation and their new, genuine products

› ART IVAL: Milk chocolate and dark chocolate with freeze-dried sour cherries › Desing: Candied Oblachinska cherry in syrup, Cherry brandy › The Fun & Fit company: Crunchy choco and cherry muesli › Puratos: Fruit fillings: Topfil origins, Topfil choice, Topfil extra, Topfil plus › Fruvita: Cherry-based juices › Pekara Ključ: Oblachinska-based cake and pie › Cold Pressok: Granola with sour cherry and walnut, 100% sour cherry fruit spread › Amaks – JoToGo: Sour cherry Greek yogurt › Zdravo product: 100% fruit sour cherry juice › Boni: Chrono-chocolate (one with dried Oblachinska, another with Oblachinska concentrate) and cake › Del trade: two concepts of RTU (ready to use) and frozen cakes › Dolovac organic i tradicija: Rolls with Oblachinska cherries in the works Center activities ranged from providing technology advice and research during product development - prototypes, product design, branding and labeling, and marketing and sales. As a result, 18 unique products have been created, such as milk chocolate with freeze-dried sour cherries; granola mix made of cereals, oblachinska cherries, and walnuts; yogurt with oblachinska sour cherries and cereals, and more. The Center conducted several promotional and marketing activities to inform potential buyers and the public about new products and increase awareness of Oblachinska potential. They participated in an online B2B event hosted by Food Ingredients Global (based in Frankfurt, Ger- many), organized five promotional events in domestic specialized food shops with product tasting, and con- Some of the premium food products developed through the ducted intensive communication with Center for Oblachinksa products several potential customers from retail and HORECA businesses. Addi- tionally, the story of the Oblachinska cherry was communicated through social networks, online and traditional media, including a news story on a Serbian public broadcaster. These efforts resulted in significant initial sales of these products in Q4. In just three months since the products’ launch, beneficiary companies sold $370,000 of these products. A model such as this one can be easily applied to other GI products, as they represent a great opportunity for Serbian food producers to better position their products and achieve greater recognition among consumers in increasingly competitive markets in the EU and the world.

Annual Report Y4 32 Serbian Food Technology Council: Based on previous CSS activities, food technology services have been recognized as a priority for Serbian F&V processing SMEs. The Serbian Food Technology Council (SFTC) is a professional organization that organically emerged from CSS pilots to support the food industry through know-how transfer. CSS supported SFTC activities in 2020 to assist five SMEs (Natura Gusto, Black Grass, Victoria, Slatka jesen and Jastrebačka priča) and four cooperatives (Agro Iris, female coop “Kosjerka”, first complex coop “Naši voćari”, and Profi Agrar) from less developed regions of Serbia. SFTC helped them create more than 50 market-ready food products and applied an eco-friendly, waste-free production process. The entities have already registered substantial additional interest from the market. For example, Profi Agrar Kosjerka and Slatka Jesen started selling premium juices and fruit spreads to HoReCa; Naši Voćari began producing private-label products for local SFTC expert presenting new fruit TIM99 distribution company; Black Grass started selling processing technology to female juices and syrups domestic supermarket chains, while cooperative “Kosjerka” staff. Viktorija introduced their “Magic Forest” products and commenced export to Canada. With the additional capacity to increase production, the beneficiary companies have invested $110,000 in new equipment and facilities. Most importantly, SFTC is continuously getting requests for assistance from new firms in the market. Wine-segment support: Since 2006, Serbia’s wine segment has witnessed a revival with the boom of small wineries that have successfully brought Serbia onto the world’s wine map. De- spite private sector efforts and GoS subsidy programs, the broader visibility of the Serbian winemaking industry remains low in international markets. In addition, the wine segment needs a systemic approach to enhance innovation and acquire up-to-date knowledge based on best international practices to improve their competitiveness. Similar to specialty food, the wine segment is made up of a number of micro and small firms fighting for their place in the domestic market. The Project included the wine segment in its work plan as interventions from the specialty food segment can be quickly replicated. A major promotional event to grab market attention, a focus on autochthonous varieties such as Prokupac, and international promotion can all lead to market openings both at home and abroad that can spur further investments in the industry. "Prokupac Caravan" (exhibition of Prokupac wines) Kragujevac, It is important to note that the industry also receives significant subsidies, which will quickly drive adop- 10th October, 2020 tion, but without a true market access strategy. This year, the Serbian Grape and Wine Union was set up as an umbrella association made up of representatives from all 12 regional winemakers associations. They produced the new Strategy for Development of the Serbian Wine Segment 2020-2030. The Strategy launched a major subsidy program to support the industry, along with the existing IPARD scheme. The Project signed a Letter of Intent (LoI) with the Serbian Grape and Wine Union to conduct joint promotional and marketing activities focused on building a recognizable brand and visual identity for

Annual Report Y4 33 a prosperous Serbian grape and wine community. All promotional and marketing efforts will serve to reinforce a consistent and clear message with international and Serbian media and consumers, including stories about the natural advantages of the unique and diverse grape growing characteristics of Serbia. The major promotional event in the last quarter was the fifth Prokupac Days event, a series of high-profile promotional and educational wine- related events that took place from October 10-15, 2020, and was supported by the CSS Project. From October 10-12, the Prokupac Caravan was organized in cities across Serbia gathering more than 45 wineries that pre- "Taste the Difference, Taste Prokupac!” conference, October 13, sented Prokupac labels at 2020 city squares to over 600 citizens and attracted more than 100 participants at wine-related workshops. On October 13, Shan- ley Pinchotti, Director of the USAID/Serbia Office of Democratic Governance and Economic Growth, and the Minister of Agriculture, Forestry and Water Management Branislav Nedimovic, opened the "Taste the Difference, Taste Prokupac!” conference. The conference brought together 75 regional, local, and international wine experts, and industry representatives to discuss viticulture, new technologies in the field, the potential of Prokupac wine and other local grape varieties, and how to promote and further develop worldwide recognition of Ser- bia’s wine segment. The follow-up Prokupac Show, organized at the Belgrade Fair, presented 30 selected wineries from across Serbia that exhibited their wine collections to over 350 visitors. Throughout the week, Prokupac Week was celebrated in wine shops and restaurants across the country, with special promotional activities, tastings, food & wine pairings with Prokupac wines. 35 media representatives and wine experts from Croatia, Slovenia, North Macedonia, Hungary, the UK, Finland, and Serbia participated in the event, and had the opportunity to visit and learn more about the regions where Prokupac is produced, regional vineyards, and local winemakers. The event generated extensive positive media coverage with approximately 50 media references in national, regional, and local media outlets, and also generated exceptional sales results. Some restaurants have included wine from Prokupac in their permanent offer.

Integrating CSS models into public support. Innovations in the Serbian food industry—Creating synergy between food processing and other key industries: The Smart Specialization Strategy8 Serbia (4S) has as its main goal supporting the commercializa- tion of innovations in a variety of industries. Thanks to

8 The European Commission's Cohesion Policy aims to reduce differences and ensure a balanced development between regions, and to ensure growth across Europe. EU Structural Funds are among its main tools. For this reason, over the programming period 2014-2020, developing a Research and Innovation strategy for Smart Spe- cialization Strategy has been a prerequisite in order to receive funding from the European Regional Development

Annual Report Y4 34 CSS efforts, last year the food industry was included in the program, and two packing induction firms were awarded support grants. The novel packaging solutions aim to increase food shelf life, preserve the nutritional value of food products, and protect the environment by using recyclable materials. In Q4 (March 2021), MTM Sirela doo from Čačak launched its new antimicrobial active packaging to ex- tend fresh F&V shelf life and reduce food waste. The company already signed LoIs/pre-contracts with nine food producers to supply Woolpack box – multiple-usage environment- them with new food packag- friendly styrofoam alternative has a recyclable ing: KMN Čačak, Frigopaun wool interior. It helps preserve F&V products in Požega, Laki doo Arilje, long distance travel, meal kits and e-commerce Zlatiborski eko agrar doo Čajet- food delivery. ina, Mlekara Gaj doo Čačak, ZZ Trlić Ub, Vasović doo Čačak, Costas doo Vrčin-Belgrade, and District Food Corner Čačak. Over the same period, Organica nova, a Belgrade-based company, finalized, tested, and commercialized a unique Woolpack box (see picture above). This cost-competitive, zero-waste, and 100% recyclable packaging solution for food delivery/cater- ing aims to replace styrofoam boxes. Three Serbian F&V processors - Intersad doo and Laloski doo, both from Novi Sad, and Menex doo from Krusevac - signed LoIs with Organica Nova and purchased initial quantities to test the new packaging. Organica Nova also received interest from the American company "Sims Foods" (Dadeville, Alabama), and negotiations on cooperation are expected to continue soon. Working towards sustainability through systematic support and integration with state aid programs (RAS): In January 2021 (Q4), inspired by CSS’ 360-degree SME support models, RAS released a public call for the Program for Export Promotion Activities (the Program). The US $1.5M Program aims to improve export capabilities and competitiveness of domestic companies from the food and wood sector and thus increase their revenues from export. The Pro- gram covers measures such as consulting support for export capacities and marketing activities; exhibiting at international fairs and business (B2B) meetings; entering target markets and improving positions in existing markets (including the introduction of production and food safety standards); improving production capabilities (including the development of new, innovative products for targeted markets and procurement of specific equipment to increase exports to target markets).

Fund. The Smart Specialization Platform assists Member States and candidate countries (e.g. Serbia) to develop, implement and review their Smart Specialization Strategies. These include a focus on identifying niche areas of competitive strength, solving major societal challenges, bringing in a demand-driven dimension, fostering innovation partnerships emphasizing greater coordination between different societal stakeholders and aligning resources and strategies between private and public actors from different governance levels (source: https://ec.eu- ropa.eu/jrc/en/research-topic/smart-specialisation)

Annual Report Y4 35 The Program is based on models for support SMEs through the creation of high-value, innovative food products, which include advanced technological processes and improved design (e.g., food hubs and incubators). This initiative is a result of the Project’s efforts to secure the sustainability of business support models developed by CSS through existing and new incentives programs provided by GoS. More information on the Program can be found at http://ras.gov.rs/javni-poziv-za-ucesce-u-programu-podrske-privrednim-drustvima-za-pro- mociju-izvoza-u-2020-godini.

4. Additional Initiatives Project response to the COVID-19 crisis: educating Serbian extension advisors on food safety measures. Since its launch, the Project has worked to improve the Serbian F&V industry’s capacity to meet food safety standards, recognizing the importance of these standards for entering high-value markets and improving small-scale farmers’ ability to access EU-based fresh F&V supply chains. The Project and the Institute for Science Application in Agriculture (IPN) co-organized an online education session in late April 2020 for the AES on pre-emptive measures in the food industry & agriculture related to the COVID-19 crisis, as well as hygienic measures as a part of the GLOBAL G.A.P. standard in food production. This online event was initiated by the MoA and the Project in response to the outbreak of the Covid-19 pandemic, aiming to mitigate the impact of the pandemic on family households and the F&V sector. The online educational session was designed in a training-of-trainers (ToT) format. The attendees, AES advisors, play a crucial role in educating over 450,000 small-scale producers and growers. Two Project experts, both field task officers with vast experience in the area of food safety, fruit and vegetable production, and GLOBAL G.A.P. standard implementation, gave lectures during the session. The event was hosted by IPN, the research and educational institution designated by the MoA to supervise and design agricultural extension programs in the country and continuously organize the capacity building of AES advisors. There was significant interest in the topic, with attendance by 85 agricultural advisors from across Serbia. Participants unani- mously evaluated the education session as very useful and well organized. Without underesti- mating the importance of field visits and direct contact between the farmers and local agricultural advisors, the AES and MoA recognized the great potential of technological tools to create content for remote learning for both advisors and farmers.

Workforce development Serbia’s food processing industry has been characterized by low levels of cooperation between academia/research and the private sector. If the industry is to be competitive in international markets, collaborative programs and knowledge exchange should support immediate and future industry needs. CSS actively engages with educational institutions and the private sector to develop models of cooperation and workforce improvement programs. In line with this, the workforce development component includes interventions such as internships, entrepreneurship programs for young people, professional workforce improvement programs, and developing new/modern educational models.

Annual Highlights – Workforce Development

✓ The first professional short-term certification course “Postharvest Biology and Technology” was developed and implemented (online, due to the COVID-19 pandemic) on 8-12 March 2021. It was developed by the AgroNET Centre for Education and Research (as a part of FoA) in collaboration with the UC Davis Postharvest Center. The Director of the Postharvest Center was one of the guest lecturers.

Annual Report Y4 36 ✓ AgroNET has developed two more short-term courses and offered them to the F&V sector and wine producers: "Intensive production of vegetables & fruits in protected areas," offered on September 24-26, 2020 in the municipality of Knic, and "Modern approaches to wine production with a terroir stamp," offered on October 22-24, 2020 in Prokuplje. ✓ AgroNET’s wine training attracted a great number of participants, which tells us about the visibility and quality of AgroNET’s educational programs. Participating companies were willing to pay to participate, demonstrating that in the future it is realistic to expect that market demand for these types of trainings will allow them to become self-sustaining and successful without project support. ✓ The e-version of the manual “Vegetables and Fruits – From Harvest to Placement” was published on March 6 at www.agronetbeograd.rs and can be downloaded free of charge. The manual is a resource for the “Postharvest Biology and Technology” course. ✓ AgroNET published the monography titled “Blueberries” as a hardcopy book. This publication provides the latest information on successful blueberry cultivation, harvesting, and post-harvesting technologies. It also builds on substantial efforts by the Project to diversify export markets for Serbian blueberries and pave the way for the highest value returns for producers. ✓ Due to significant promotion in the previous 2 years, the Ecotrophelia competition attracted higher education vocational schools for the first time. This promising development suggests that in the future a much higher number of teams from all across Serbia will take part in this activity, motivating a greater number of young people to consider entrepreneurship.

Professional Certification Courses (I2-5) AgroNet - Partnership with University of California (UC) Davis: In year 4, AgroNET continues to develop and implement industry-specific, short-term professional development courses based on the best practices from UC Davis. After a successful first year of implementation, cooperation with AgroNET continued, to scale up the course and consider regional options. This initiative supports the development of a viable model for continuous learning, enabling SMEs in the food sector to recruit professionals with specialized knowledge, as well as enhancing the knowledge of industry practitioners to support business and industry needs. AgroNET conducted a survey of companies that confirmed the need for professional development in two main areas: production and business. As a result, AgroNET offered three new courses in 2020: a) The three-day course, “Intensive production of vegetables & fruits in protected areas” in Knić, from 24-26 September: The course was attended by 30 participants, of which half were individual F&V growers and producers, while the others Training participants field visit to came from companies such as Avital, Groza Gruza Agrar’s blueberry orchard Agrar, Dolina Morave, Risk Engineering, Šume Topola, UMP Fragola, Beograd, etc. Around 10 representatives from the Municipality of Knić and Koceljeva also attended the training. University professors Djordje Moravčević, Jasminka Milivojević, and Vlade Zarić from the Faculty of Agriculture gave lectures, as did industry expert Olivera Lukačević from Avital. The course covered indoor and outdoor intensive production; managing irrigation and fertilization systems; equipment and materials for F&V cultivation without soil; modern technologies in the production process of strawberries, raspberries,

Annual Report Y4 37 blackberries, and especially blueberries; developing business plans and sales and marketing methods. The event ended with a field trip to visit local producers of blueberries, strawberries, peppers, and tomatoes. b) Wine-sector educational activities: CSS partnered with AgroNET to design and deliver training to develop a professional workforce and for wine producers, particularly using the autochthonous Prokupac variety and other local vine varieties. AgroNET organized a three-day wine training titled "Modern approaches to wine production with a terroir stamp" for winegrowers and producers based in Prokuplje from October 22-24, 2020. The training combined theoretical and practical work and provided an excellent opportunity for representatives from the wine industry to network and exchange knowledge with prominent lecturers and other industry experts. Participants had an opportunity to learn about modern approaches and nov- elties in grape and wine production, digital marketing, and e-commerce, key topics for improving Visiting Zupa vineyards wine quality, and to brand and promote the Serbian and Doja winery wine industry. Special attention was given to Prokupac, Serbia’s autochthonous wine variety, grown in several regions across the country. 30 participants attended the training, including individual growers and producers as well as representatives from the wineries across Serbia: Virtus (Zabari); Ra- dovanovic (Krnjevo); Tri Planine (Aleksandrovac); Draskovic – Swisslion (Vrsac); Kostic (Prokuplje); Grabak (Vrnjacka banja); Botunjac (Donje Zleginje); Todorovic (Knjazevac), Milosavljevic (Trstenik), and Aleksandrovic (Topola). Additionally, over the course of three days, the four wineries Spasic (Aleksandrovac), Ivanovic (Aleksan- drovac), Toplicki vinogradi (Prokuplje), and Cokot (Starci) organized practical on-site training events where participants learned best practices and exchanged lessons learned in wine production. The growing cooperation between academia and the private sector will continue in the future, with more tailored courses on industry-specific topics for wine producers. c) After successfully piloting the “Postharvest Technology and Biology” course in 2019 and based on lessons learned and feedback from partic- Postharvest Technology and Biology online course ipants, the coursework has been further refined and an updated version of the course was offered online on March 8-12, 2021. Participants had an opportunity to learn more about key issues related to the following topics: the importance of fresh F&V in modern diets and the latest trends in the food industry; F&V preservation and storage basics; best practices in modern packaging, distribution, and logistics operations; and the application of

Annual Report Y4 38 innovative technological growing processes, among other topics. Due to particularly high interest among participants for the online course titled “Importance of Tempera- ture Management,” held by UC Davis Professor Elizabeth J. Mitcham, the lecture was organized over two days. On the last day, March 12, the CSS CoP Aleksandar Pavlovic gave a presentation titled “The challenges related to fresh fruit and vegetable exports to the EU markets.” Following the lecture, Professor Djordje Moravcevic from AgroNET/FoA with Aleksandar Bogunovic (Serbian Chamber of Commerce), Ale- ksandar Pavlovic (Project CoP), and private sector representatives facilitated a panel discussion on how to overcome obstacles for F&V export to high-value markets, with an emphasis on the EU markets. Over four days, 91 participants attended the certification courses (daily average of 50 participants), including prominent representatives from private sector companies, individual growers and traders, and students who col- lectively rated the course quality and lecturers with an overall score of 4.89 (on a scale of 1-5). CSS is actively working with the AgroNET team on a sustainability plan to ensure that it becomes a regional center of excellence for knowledge exchange between academia and the industry.

Some AgroNET trainings participants also received support through other CSS components. For example, the Pantelic Company received technical assistance (TA) through the CSS Ac- cess to Finance efforts, and successfully received a loan and realized investments as a result. Frutorga also received TA, and the project helped them receive a grant from UNOPS. Repre- sentatives from two wineries (Vinarija Virtus from Zabari, and Vinarija Grabak from Vrnjacka Banja) attended the AgroNET training and also participated in the e-commerce value training organized as part of the CSS Access to Markets component. This demonstrates the intercon- nected reality of CSS market system interventions.

Partnership with Private Sector for New Educational Models (I2-10) Lukowa Académie: Traditional curricula at Serbian universities do not provide students with the practical knowledge and skills necessary to work in export-oriented companies. In addition, the faculties do not popularize the industry and generally work with companies oriented towards a local market. As a result, export-oriented companies in the food sector struggle to recruit individuals with sufficient skill sets from the existing labor force. At the same time, leading private sector firms have been developing their own models of cooperation with the In last two years, LUKOWA Académie university system. provided: In the initial project phase (2018-2020), CSS col- Training for 60 participants, laborated with LUKOWA Holding, a leading ex- Realized 23 students’ internships, porter in the food processing sector, in a strategic partnership with the Faculty of Organizational Provided 9 employment offers to young Sciences, University of Belgrade, that piloted people. and established the LUKOWA Académie. This Four additional candidates were engaged systematic model focused on students’ to work on the new LUKOWA project knowledge and skill sets in fields of key im- called Inno-Food Lab where they will portance for private sector companies operating explore ways to innovate the develop- in the food sector - digitalization, commercial fi- ment of new products. nance, and entrepreneurship. The model is both self-sufficient (now fully funded and imple- In 2020, Lukowa Académie became mented by LUKOWA) and sustainable, and completely self-reliant and sustainable, organizing a fully online program without CSS support; they enrolled 30 students, majority women, and offered 4 in- Annual Report Y4 ternships and 2 employment positions. 39 scale-up is already evident as LUKOWA expanded collaboration with more universities (Novi Sad) and faculties (Agriculture, Economics, Technology, Electro Engineering). As a result of this effort, the food processing industry is now being actively promoted as a future business/career opportunity to a variety of student profiles. In the following years, LUKOWA will include other firms from the industry in the program to widen the pool of opportunities for students. Besides the successful collaboration on LUKOWA Academie, the Education for Growers Pro- gram was implemented in Y3. 600 participants - primary producers of F&V – received training through 16 workshops. Through cooperation with 110 new growers, goods valued at $760,000 were obtained.

Tailor-made Internship model for the food processing industry (I2-11) Youth for Impact (YFI), in collaboration with the Center for Career Development (University of Belgrade) and with support from the Project, developed the first standardized and sustainable internship program model in the food processing sector. The program was off to a promising start, with six companies accepting students for internships and a manual on implementing the program published and shared at the first AgBg fair. The internship program has however been stalled due to the COVID-19 crisis. Program promotion at the Spring Internship Fair was canceled in 2020, and firms, in general, have not supported internships this year because of COVID-19. This program is a unique and sustainable opportunity, given its novelty in the food processing industry and the coordination with the Center for Career Development. Pending future COVID-19 developments, CSS will continue to promote the program through industry events such as AgBg, the BFS, and others to stimulate scale-up (i.e. more firms implementing internships). The replicability of this model will depend on the success of the scale-up.

Ecotrophelia- SAFT (I2-11) Promoting youth entrepreneurship: Entrepre- Serbia is the only non-EU country that par- neurship remains a hot-button issue for Serbian ticipates in this competition and managed youth, specifically in the agriculture and food to make a great success: the winner of sector, and must be systemically addressed on Ecotrophelia Serbia 2019, took part in the various levels. For three years, the Project sup- EU Ecotrophelia Competition in Cologne on ported the Serbian Association of Food Technol- October 6-7, 2019 as a part of the ANUGA ogists (SAFT) within the Faculty of Agriculture exhibition, the world’s largest trade food (FoA) at the University of Belgrade to organize fair. The CandyMoo team from FoA with a national competition in eco-innovative food their MoCaMela product (cheese with mo- products, Ecotrophelia Serbia. The Project also lasses and honey), won the 7th place supported the Serbian team to participate at the among 17 other participating EU teams. In October 2020 at the online EU competition, Ecotrophelia Europe Finals (within the SIAL the Serbian team “Globee” from the Acad- food exhibition in Paris, France, and Anuga in emy for Applied studies in Belgrade, winner Cologne, Germany). Participation at Ecotrophe- of the national Ecotrophelia competition, lia offers a ground for rich and productive ex- was awarded 7th place for its “Globee” de- changes between the education/research sectors sert, a healthy treat made from fruit byprod- and the business world. For food industry profes- ucts, cereals, and bee products. sionals, it offers a large pool of ideas, talents, skill sets, and innovation. The growth of this event will lead to a more vibrant, diversified, and innovative sector. The Project plans to continue supporting the SAFT by co-funding the Ecotrophelia competition until it becomes fully sustainable. Ecotrophelia was already recognized as a valuable activity that promotes entrepreneurship and encourages young people to start their own business by the

Annual Report Y4 40 Ministry of Agriculture, Forestry and Water Management. The Ministry partly funded SAFT (with 200,000 RSD) in 2020, along with other donors such as the UNDP, Science Technology Park, and Ministry of Education, Science and Technological Development. To increase its As a result of successful promotion of Eco- competitiveness, Serbia must continue partici- trophelia 2018 when 16 students competed pating in EU-level competitions and to follow in 4 teams, greater interest among students global trends in food industry innovation. resulted in a higher number of applicants for Ecotrophelia 2019: 42 students in 9 Due to the situation with the COVID-19, the teams participated. Due to the COVID-19 eighth national Ecotrophelia 2020 student com- only 4 teams participated (11 students) at petition was postponed, taking place in Septem- the national competition in 2020, and the ber. Four student teams from Serbian universities EU Competition was held online. and (for the first time) vocational schools, competed, presenting new and innovative eco-food products. First place was awarded to the Globee Team from the Academy of Vocational Studies Bel- grade, for their product “Globee”, a spherical snack product based on fruit by-products, cereals, and bee products. National student competition Ecotrophelia 2020

The Project assisted the Serbian team at this year’s EU Ecotrophelia competition held in Paris on Octo- ber 18th, which was online for the first time. Thir- teen university student teams from all over Europe, in collaboration with respective national food associations, competed in the creation of innovative food products in front of the 15-member jury. The th Serbian team presenting the Serbian team “Globee” was awarded 7 place. “Globee” dessert. Many products from EU Ecotrophelia are developed and marketed throughout European markets. This activity is a part of the Project’s broader efforts to support youth entrepreneurship and innovative products by bridging the gap between academia and the F&V sector, increasing employability by providing skilled labor, and by motivating young people to join the sector.

Other Partnership Activities In January 2021, the Project supported the printing of the publication “The Blueberries,” published by the Faculty of Agriculture (FoA) and AgroNET, to build the capacity of the Serbian fresh fruit segment. This initiative is a part of the Project’s strategic efforts to strengthen links between academia and the food processing industry and to professionalize and upskill the local workforce with new knowledge and skill-sets needed to increase competitiveness in domestic and international markets. Blueberry plantations in Serbia have been rapidly increasing in recent years due to high market demand. Production capacities must be supported with increased technological knowledge to meet high quality and safety requirements.

Annual Report Y4 41 "The Blueberries" monography provides the latest information on successful blueberry cultivation, harvesting, and post-harvesting technologies. The publication also builds on substantial efforts by the Project to diversify export markets for Serbian blueberries and pave the way for the highest value returns for producers. The end of the publication provides space for companies whose activities are directly or indirectly related to growing blueberry plantations to advertise their services. Each sup- porter will be given 15 copies of the publication that can be donated to partners as educational material.

COVID 19-CONTEXT

▪ AgroNET offered free consultations related to production, processing, exports, 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. ▪ AgroNET “Postharvest Biology and Technology Course” was postponed due to Covid-19, and later held online in March 2021. ▪ A partnership between Sirogojno and OSU was deemed not possible given the required travel to the US and a specific time frame to develop the Farmer’s College. As the Project is in its last year of implementation, there is not enough time to develop this Program properly. ▪ The national Ecotrophelia competition was postponed from June to September 2020. The European competition was organized fully online, and the winning team from Serbia’s Eco- trophelia participated in the EU competition virtually, earning 7th place.

Access to Finance

Annual Highlights

✓ $15.34M in new investments due to Project supported programs ✓ 34 companies received TA, 31 companies applied for 35 loans/subsidies and launched new investments worth $14.16M ✓ Demand for DFC Loan Guarantee is growing, as it remains the preferable option for financing larger agribusiness investments. The two participating banks received a new tranche of $40M ✓ CSS supported companies, entrepreneurs, and farmers of all sizes to access finance ✓ Pilot Revolving Fund for agribusiness of $40,000 was established in the Čajetina municipality ✓ A feasibility study for establishing the first AIF for agribusiness showed a lack of incentives for investors ✓ In Y3 and Y4 CSS contributed ~$30M in new investments – $14.6 M in Y3 and $15.3M in Y4

After exploring several models for improving A2F during the first two years of Project implementation, including private equity options and innovative financing mechanisms, and carefully studying lessons learned, in Y3 and Y4 CSS focused all efforts on realistic and in-demand

Annual Report Y4 42 solutions to financing challenges. Approval of the first DFC credit guarantee line in the country also assisted in focusing project efforts on tangible goals. This includes building linkages between established and trusted local service providers (consultants, outside of Belgrade and Novi Sad) and companies from the F&V sector working with SMEs mostly in underdeveloped regions, building up market demand for financial products and services. SMEs receive a complete overview of all financial products in the market and professional support to prepare strong business plans and applications for external, strategic financing. The goal of this approach is to move the F&V sector towards modern production processes and high-value products in all industry segments while increasing demand for specialized financial consulting services. Furthermore, companies were also supported to apply for specialized Covid-19 financing programs, enabling them to overcome financial constraints and market disturbances during the pandemic. Another effort focused on the most pressing market segment – micro-producers who are not bankable and remain unable to enter any type of structured market activity, which is the majority of traditional rural households in Serbia. CSS established an innovative alternative financing vehicle - the Pilot Revolving Fund (PRF) for agriculture in the municipality of Čajet- ina. The Čajetina PRF success laid the framework for this model’s rollout in new municipalities as well. Due to the provision of customized financial technical assistance (TA), or as a result of increased sales and improved operations, supported F&V companies invested $15.34M in Y4 – $14.2M comes from direct financial TA, $40,000 from the Čajetina PRF, and $1.1M as a result of improved sales and operations as reported by the beneficiaries.

USAID guarantee scheme (DFC) (I3-4) USAID guarantee scheme (DFC): The Loan Portfolio Guarantee Agreement (DFC Guaran- tee) between DFC and three commercial banks in Serbia is a risk-sharing tool. It guarantees 60% of principal losses on loan disbursements made to qualifying borrowers in the agricultural sector. The guarantee covers a portfolio totaling $90,909,091 over a 12-year period. The DFC Guarantee was introduced in December 2019. In 2019 ProCredit and Addiko Bank both registered for the first tranche of the guarantee in the amount of $10M each, quickly exhausted during the first four months of 2020. Over 50% of all loans were approved for companies from the F&V sector. In February 2021, banks registered for the second tranche; Pro Credit bank received $30M and Addiko Bank received $10M. Intesa Bank has not yet completed the contracting procedure. CSS worked with three consultants to provide professional technical assistance to companies applying for loans with the DFC guarantee. Since the guarantee’s inception, CSS has been actively promoting loans through this mechanism, and assisting consultants and banks to find clients to receive CSS technical assistance. In Y4, client interest has been substantially higher than the banks’ capacity to accept new applications. Approvals for clients under Project TA demonstrate that the scheme is especially attractive for companies with sizable IPARD investments who would find it difficult to fund investments between $0.5- $2 million without the DFC support. The consultants provided TA to four companies to apply and receive approvals for loans with the DFC guarantee for investments totaling $2M. One of the companies is Menex doo, Kruši- vac, is a project partner in “Hub and spoke” model. During 2020, consultants submitted applications for an additional six clients who applied for loans with the DFC guarantee totaling over

Annual Report Y4 43 $5M, but due to the exhausted limits at both banks, these clients were approved for loans secured with other available guarantee programs (GoS guarantee, InnovFin etc.). Among these clients are Pantelić (an AgroNET course participant), Natura top, B.S.A Fruit, Jugprom, and others.

Key Results

✓ 4 companies completed Project TA and received approvals for loans with the DFC guarantee in Pro Credit and Addiko banks to finance investments worth $2M. ✓ Both banks exhausted the first tranche of guarantee funds by May 2020 and received the second tranche in February 2021. ProCredit Bank received $30M and Addiko Bank received $10M. ✓ In Y3 and Y4, the Project provided technical assistance to 11 companies to get approvals for loans with the DFC guarantee, and complete investments of over $8.1M – in Y3 to 7 companies (investments $6.1 M) and in Y4 to 4 companies (investments $2M).

Increasing demand for finance (I3-1) The TA model described above supports a complete platform of financial products, not only a DFC guarantee. After assessing the results and effectiveness of this program in Y3 with the original group of consultants, CSS made necessary results-driven adjustments and continued ongoing cooperation with three professional consultants. SimCert Consulting, Kruševac, MS Consult Svilajnac, and ARDA, Arilje.. As already described, consultants come from outside of Belgrade and Novi Sad due to superior performance, and are engaged under a pay-for-performance scheme, The project goal in Y4 was to increase client service outreach, with new clients coming from the top berry-producing region Arilje and south-Serbia regions, specifically targeting underdeveloped areas of the country. As with other interventions, the COVID-19 pandemic influenced Three consulting firms from Kruševac, Arilje and Svilajnac pro- consultants’ work methodology, vided TA as we purposely moved from Belgrade and Novi Sad as the majority of clients received generalists, and wanted to expend and improve capabilities of info sessions, mentoring, and smaller local consultants across Serbia. consultations on business plan Under Project TA beneficiaries were able to submit applica- development online to adjust to tions for external financing to: the new COVID-19 realities. ✓ Banks for standard, Covid-19 and loans with DFC guar- The pandemic also required the antee, project to adjust the type of in- ✓ MoA specialized subsidy programs for F&V and wine investments supported through TA. dustries While in Y3 the Project focused ✓ Development Fund of Serbia (DFS) standard and Covid- on fixed asset investments, in Y4 19 loans more applications were submitted ✓ Investment incentives from Serbian Development Agency for liquidity and working capital (SDA). loans, especially after the GoS opened two attractive COVID-19 loan programs in order to prevent liquidity crises during the pandemic. Clients’ attitudes towards investment financing also changed. The most important trends CSS observed in Y4 include:

Annual Report Y4 44 > Throughout the year, companies were focused on day-to-day operations - liquidity and working capital needs - rather than undertaking major investment projects. > In the period between April and July, many companies decided to postpone major investments and focused instead on maintaining daily operations and liquidity. They were uncer- tain about the duration of the pandemic and its potential economic impact on agribusiness. A majority of frozen and fresh F&V producers had a good harvesting and sales season and resumed investing in summer 2020. With the exception of companies with IPARD approvals, many others focused on smaller investments and applied for MoA investment subsidies and Covid-19 loans. > In May 2020, the GoS introduced two new subsidized COVID-19 loan programs as a part of its economic relief program. The first was through the banking sector for working capital loans with an 80% State guarantee, and the second program through DFS offered loans with 1% APY for up to 36 months. The latter emerged as the most attractive lending option on the market, and many companies sought to acquire funds through this mechanism. Many clients decided to use them both for working capital needs and for smaller investments. > Both GoS programs were extended into 2021. The first program with banks was very successful and used by many. The DFS loan program, with available funds of ~$240M, received around 20,000 applications, but approvals fell short of companies’ expectations. Approval rates, initially fast, slowed after September 2020, and nearly stopped in 2021. In April 2021, DFS issued a statement that they utilized ~$120M to date and that they will resume approvals after securing new funding. Fewer than half of the 20,000 applicants received approvals to date. > The MoA fell behind the regular approval schedule for almost all of its programs. It stopped issuing new approvals for IPARD investments during the lockdown period and pandemic peaks. This further delayed the search and implementation of investments by CSS clients who planned investments during the reporting year. MoA was also late to issue and disburse investment incentives covering up to 50% of investment costs upon investment completion, with an average delay of 2 to 4 months. > In July 2020, MoA introduced two new programs for investment support aiming to improve the Serbian wine segment. The subsidy programs, which provide up to 50% reimbursement of invested funds, encompass grape cultivation, vineyard operations, and equipment purchase for small wineries. Four investment projects received funding from these programs through CSS TA. Approvals for wine segment financing were executed on time. Expanding TA for wine producers: CSS also worked with MS Consult to provide group info sessions and individual customized TA services to wine producers after the sector was added to the program. An online info session titled “Available financing options and grants for wine segment” was organized in July 2020. Representatives from 40 wineries attended the session, and the recording was distributed to over 100 wineries. The session focused on the two new State programs offered to the wine segment through the MoA. Five wineries with immediate investment and financing needs received individual TA and submitted seven applications for financing investments worth $1.3M. Four applications were submitted to the MoA, two to the Development Fund of Serbia (DFS), and one to ProCredit Bank.

Annual Report Y4 45 Key Results

✓ As a result of the Project’s prompt response to new financing programs evolving in 2020, a good selection of subcontractors close to key clients, and the corresponding increase in demand for consulting services, the Project exceeded its annual target of 25 companies receiving financial TA, with 34 companies completing the full scope of the program: 1. 31 companies submitted 35 applications for external investment financing. 2. 3 companies postponed investments or rejected financing offers ✓ $14.16M total investment in 31 companies, broken down as follows: 1. 4 loans with DFC guarantee ($2M) 2. 9 bank loans ($8.4M) 3. 13 DFS Covid-19 loans ($1.8M) 4. 6 MoA investment subsidies ($0.9M) 5. 1 DFS standard loan ($0.17M), 1 SDA investment incentives ($0.8M), 1 owe funds ($0.06M) ✓ Investments in 29 companies totaling $13.18M are completed or in progress, while two remaining investments of ~$1M (Table 1 lines 31 and 32, below) will start after receiving final approvals for loan/financing. ✓ The achieved target for promoting external long-term financing as the preferable option for investment financing. Investments resulting from CSS TA are over 75% financed by banks/DFS/MoA, while 25% are financed through clients’ internal funds. ✓ Sizable IPARD investments dominate the CSS investment portfolio, with 7 investments worth $7.9M representing 56% of all investments. ✓ Five wineries submitted seven applications for investment projects worth $1.3M ✓ 74% of investments financed by banks, 14% by DFS, 6% by MoA, 6% other sources. ✓ Three companies applied for combined financing from 2 external sources or used 2 different types of loans in an attempt to optimize the financing package. ✓ All bank loans and the majority of applications with MoA have been approved and disbursed. ✓ DFS Covid-19 loans had a slow pace of approval. 9-10 months after application submission, 5 loans were disbursed while 8 loans (Table no. 1, 24-30) are still in the approval process. Faced with long wait times, these clients completed investment with their funds. ✓ One company applied for lucrative SDA investment incentives which are sought-after by foreign investors and rarely utilized by local companies due to high investment standard requirements. ✓ In Y3 and Y4, the Project assisted 52 companies to access financing and undertake investments worth $26.2M: 31 companies (investments totaling $14.2M) in Y4, and 21 companies (investments totaling $12M) in Y3.

Table 1: Summary of Project Y4 Finance Technical Assistance - List of investments

No Beneficiary Name Investment Description Loan Type Amount ($) 1 Menex, Kruševac Cooling systems for cold storage and solar panels DCA loan 873,191 for energy supply 2 DRENOVAC, Mirosavci Investment in equipment for fruit lyophilization, DCA loan 462,569 metal detector and pallets (IPARD) 3 MK&MK FRUIT, Ivanjica Solar panels for cold storage energy supply DCA loan 109,322 (IPARD) 4 Dima, Investment in facility and equipment for cultivation, DCA loan 1,586,880 Smederevska palanka storage and processing of hazelnuts.(IPARD) Bank loan

Annual Report Y4 46 No Beneficiary Name Investment Description Loan Type Amount ($) 5 B.S.A. Fruit, Arilje Equipment for fruit processing, calibration and pack- Bank loan 1,447,800 aging (IPARD) 6 RPG Tamara , Bojan Tractor with additional machinery, irrigation system, Bank loan 172,201 Jakešević, Ivana Vujić anti-hail system, WC 7 Jugprom, Leskovac Investment in working capital Bank loan 798,000 8 Ledena, Loznica Investment in working capital Bank loan 342,000 9 Pantelic, Kraljevo Investment in new cold store, reconstruction of old Bank loan 2,416,800 cold store, and equipment for cooling and processing. (IPARD) 10 Natura Top, Leskovac Investment in cold store, cooling systems and Bank loan 592,800 equipment for fruit and vegetables processing (IPARD) 11 Bombina, Arilje Investment in cold store, equipment for cooling and Bank loan 1,252,020 fruit processing, and pallets (IPARD) DFS-Cov19* 12 Vinarija Aleksić, Vranje Investment in equipment for wine production; WC Bank loan 872,449 (wine) DFS-Cov19 13 Terra organica, Lozovik Investment in new vineyards and equipment for MoA 311,619 (wine) wine production 14 Podrum Dremina, Investment in wine barrels MoA 25,611 Drenovac (wine) 15 Vinarija Vladimir, Topola Investment in equipment for wine production MoA 15,711 (wine) 16 RPG Bojan, Boris and Investment in land purchase and preparation, irriga- MoA 173,100 Branka Obradović tion and anti-hail systems, raspberry seeds, and mechanization 17 Jabuka-export, Arilje Investment in cold store, equipment for fruit selec- MoA 247,529 tion, certification 18 Bogutovo, Arilje Investment in cold store and equipment for fruit pro- MoA 144,705 cessing 19 GREENNED, Beograd Equipment for fruit juices production and branding; own funds 60,632 WC 20 Pekara Ključ, Beograd Equipment for bakery and key Bar production DFS-Cov19 36,634 21 LAKI, Stupčevići Equipment for fruit processing and transportation; DFS-Cov19 126,946 WC 22 MORAVICA, Arilje Anti-hail system for raspberry cultivation DFS-Cov19 276,305 23 Maxikong, Arilje Investment in equipment for fruit processing DFS-Cov19 131,158 24 DRENOVAC, Mirosavci Equipment for fruit packaging; WC DFS-Cov19* 319,103 25 Naturfruits, Arilje Equipment for fruit juices and purees production, DFS-Cov19* 62,700 WC 26 Tandex, Subotica (Wine) Investment in working capital DFS-Cov19* 97,021 27 Resava Komerc, Svilajnac Investment in working capital DFS-Cov19* 29,106 28 Inter-Funghi, Požarevac Investment in working capital DFS-Cov19* 64,034 29 S Frukt doo Krnjevo Investment in working capital DFS-Cov19* 19,404 30 Rubus Hill, Ivanjica Investment in working capital DFS-Cov19* 116,426

Annual Report Y4 47 No Beneficiary Name Investment Description Loan Type Amount ($) Investments completed or in progress $13,183,779 31 Euro Line, Kragujevac Investment in construction and equipment for cold SDA* 808,897 store facility (awaiting investment incentives appr.) 32 DEVČA promet, Merošina Cold store reconstruction (awaiting loan appr.) SDF* 170,554 Total investments $14,163,230

*Loans are in the approval process at the DFS and SDA for 9-11 months

Investments as a result of Project activities Twelve companies who participated in the range of market-related Project activities had investments in fixed assets related to their core businesses. They linked these investments to increased business activities achieved due to the participation in Project activities. As a part of the CSS annual survey, these companies reported total investments of $1.1M, $0.5M of which was invested by a single industry leader, while 11 micro-companies reported new investments of $0.6M. Leveraging other programs: CSS supported two start-up companies from south Serbia - Fru- torga from Prokuplje, one of our “hub and spoke” grantees, and Black Grass from Vlasotince, a participant in private label hub - to prepare applications for EUPRO grants distributed through UNOPS. Two investments worth $78,000 received grants of ~$27,000 each. CSS provided a referral and recommendation for “Pekara Ključ”, a participant in the BFS Pitching session and the Desing Oblachinska Cherry program, to receive a special grant for a women-owned business in the amount of $5,700.

Key Results

✓ 12 companies reported new investments in the total amount of $ 1.1M as a result of participation in Project activities. ✓ Companies of all sizes reported investments. Micro companies, predominantly from the specialty food segment, invested $0.6M. ✓ 3 micro-companies received grants from EUPRO and Divac Foundation of $53,000 for investments worth $74,000.

Growth through Investment financing (I3-3) Pilot Revolving Fund for agriculture: With an aim to facilitate access to finance for micro farmers, CSS developed an innovative revolving fund model based on the public-private partnership concept, to target micro, unbankable producers in rural Serbia. CSS subcontracted the Divac Foundation to implement the pilot and invest in the first Pilot Revolving Fund (PRF). The PRF was created in June 2020 by the Divac Foundation and Čajetina municipality represented by the fund operating partner Zlatiborski Eko Agrar, a company founded by the municipality of Čajetina to implement local agricultural policies. The foundation traditionally advancing money or goods in Promotion of pilot revolving fund in Cajetina, the form of subsidies and donations to October 2020

Annual Report Y4 48 specific groups of citizens. This is the first time they launched a campaign to help small agricultural producers under economic terms. The total PRF value is $40,000, of which the municipality contributed $27,000 and Divac Foundation contributed $13,000. The PRF provides producers with small interest-free loans secured with personal bills of exchange with flexible re- payment schedules for 36 months, through a simple and transparent application and selection process. In addition, the municipality of Čajetina approved a subsidy worth 30% of received funds to each beneficiary. The PRF is designed to be sustainable: once initial beneficiaries have paid back their loans, new loan recipients will be selected. The call for applications announced on June 15 resulted in 21 complete applications received. 19 beneficiaries were selected for support, and they have received loans of up to $2,000 each. All beneficiaries are local farmers who needed funding for small investments to develop their orchards, animal husbandry, dairy production and bee-hiving. All beneficiaries purchased equipment or cattle by the beginning of October. Successful PRF implementation, achieved results and lessons learned were promoted during a public promotional event in Čajetina in October 2020, and during an online info session in November 2020. Over 20 municipalities were introduced to this innovative concept during these promotional events, aimed at attracting new partner municipalities to roll out the model in 2021. It gained positive attention and interest among all participants. During the RFP project, the Divac Foundation prepared a practical manual for establishing and operating a RF which outlines all RF processes, policies and procedures. They also created promotional video materials about the PRF, including beneficiaries’ testimonials (https://www.youtube.com/watch?v=0iaV6wJ1cfQ), and organized strong media coverage of all public events via traditional and digital media platforms. Over 30 local and national media informed about the project, including main national TV station RTS1. In order to scale up the successful PRF model, CSS will subcontract Divac Foundation to roll out RF model in three to four new municipalities in 2021 and 2022.

Key Results

✓ The first innovative Pilot Revolving Fund worth $40,000 was jointly created by the Divac Foun- dation and the Čajetina municipality in June 2020. ✓ 19 micro farmers from Čajtina received interest-free micro loans of up to $2,000, with 30% subsidy, repayable in 36 months, and made small investments in equipment and cattle. The first installment due in December was timely repaid by all beneficiaries. ✓ The model was presented to 20 municipalities and three regional development agencies. It attracted strong interest and set solid ground for model roll out in 3 to 4 new municipalities in 2021 and 2022.

Alternative Investment Fund (AIF): In order to evaluate actual market conditions for establishing the first AIF for agribusiness in Serbia using a DFC guarantee or financing available for private investment funds, CSS subcontracted Valor Group to prepare a Feasibility study for establishing an AIF specialized for agribusinesses. CSS was seeking an opportunity to deploy the newly adopted Law on AIFs, which came into force in April 2020. This Law was supposed to set an opportunity for investors to invest in venture capital and equity funds and diversify the local financing offer in the Serbian market. The feasibility study provided an analysis of the legal and business environment for establishing an AIF and good insight into the management and organizational requirements for an AIF. The length of legal procedures for establishing an AIF extends over six months, and existing

Annual Report Y4 49 legal limitations related to tax incentives for investors are still present. Even with those re- moved, the nature of the Serbian agribusiness sector, as well as other sectors other than IT, dominated by subsidies and plentiful sources of finance, does not leave a lot of hope that private funds would have market-changing success. The Project decided thus to cease this initiative during Y4 and focus on interventions that have shown much greater potential for adoption by the Serbian market system. BFS effects due to COVID-19: The Belgrade Food Show 2019 (BFS) pitching session resulted in three companies receiving initial requests for talks about potential investments or strategic partnerships. COVID-19 postponed these discussions, and they haven’t been resumed and finalized to date. In addition, two top-rated companies from BFS were unable to pitch to international equity investors because the Belgrade Venture Forum 2020 was canceled due to the pandemic.

COVID 19-CONTEXT

The COVID-19 pandemic surge and state of emergency measures in Serbia came at the beginning of the Y4 TA investment financing activity. The entire year was marked with changes in investment de- cisions and timing for investment implementation caused by SMEs’ internal needs and a range of external factors: a) Many companies have postponed or altered their investment plans. A positive investing trend has rebounded after closing the successful harvesting and sales summer season. b) Companies were focused on day-to-day operations, maintaining liquidity and working capital needs. They sought favorable State COVID-19 loan programs at banks and DFS. c) Within the economic relief program, the GoS introduced several attractive programs for liquidity and working capital financing through banks and the DFS. Companies were predominantly applying for these mid-term low-interest loans. Food Technology d) Given these trends, CSS adjusted its provision of TA exclusively for major investment financing, and approved work on applications for COVID-19 loans. Loans advanced through DFS were the most demanded financing option. e) DFS received 20,000 applications for COVID-19 relief loans. Approval was slow and inefficient, and by the end of April 2021 only half of the designated funds have been disbursed, with fewer than 50% of applications processed. Faced with DFS inefficiency applicants had to look for financing alternatives. f) Banks were focused on COVID-19 loans with 80% State guarantee and rescheduling existing loans in line with State instructions. Approvals of new applications for investment loans were oc- casionally on hold and more conservative compared to regular practice. g) Many companies opted for self-financed investments of up to $200,000 and applied for MoA investment incentives of up to 50% reimbursement of investment costs. CSS supported applications for MoA. h) The pandemic has postponed the banks’ subscription for the new DFC guarantee tranche. The first tranche was exhausted by May 2020. Two banks registered for the second tranche of $40M

Annual Report Y4 50 in February 2021. Demand for DFC loans was high among CSS beneficiaries, but banks were not able to process them. i) The MoA was late to issue IPARD approvals and opening scheduled new IPARD programs for large investments. The same holds for approvals for other investment subsidy programs. Conse- quently, companies had to postpone investments and applications for financing.

Strategic Communications Project promotional activities and communications were heavily influenced by new circumstances caused by the Covid-19 crisis. All Project communication efforts shifted to online platforms focusing on the website, social networks, and the Svet Hoće Domaće (SHD) platform, facilitating accurate, timely and relevant information exchange among all stakeholders. According to the revised CSS activity plan for Year 4 and the changed market situation and overall business environment, a new communication plan was developed. Additionally, the Project continued intensive communication with its partners and monitored the food industry's situation under Covid-19 to adapt Project communication and planned activities as needed. Communication efforts during 2020 followed the trend already established during 2019, but was more focused and results-driven: > to spread all successful and proven activities to help crowding-in of other market stakeholders; > to position Serbian firms and organizations as generators of change; > to stimulate a positive attitude towards the Serbian food sector and food entrepreneurship. Most activities planned and identified as those with the highest promotional potential were realized: (1) Promotion of scaled and improved partner-led activities (Serbia Does Fruit, AgroNet wine training, Belgrade Food Show and AgBg); (2) Awareness-raising campaigns (Oblachinska cherry, Prokupac day, SHD; and (3) CSS Communication (Project activities, partners and joint successes).

Annual Report Y4 51 Strategic Communications Annual Highlights

✓ The efforts invested in previous years in building the project's social networks and constant communication with the media proved to be especially important in Y4, which was marked by the Covid crisis. USAID and CSS continued to be recognized by the media and social media followers as important supporters of the industry, leaders of change and a valid authority (expert) to answer industry-specific questions ✓ Project expansion into the wine industry, specifically working on the local grape variety Prokupac provided a significant topic of great interest for the food industry and public ✓ Facebook remains the strongest communication platform for the Project, followed by LinkedIn. FB reached 50,000 fans in the last quarter, but more important, Konkurentno channels recorded significant growth in engagement, mostly thanks to the SHD online video campaign ✓ Significant presence was made in traditional and online media throughout the year. The most frequent topics were SHD campaign/webinars, Oblachinska, Revolving fund, Prokupac Day and AgBg ✓ Successful cooperation with the Serbian national broadcaster, RTS, continued with five be- spoke reports broadcasted on the news, including the most-watched TV show. Topics included Oblachinska promotion and product development, the Serbia Does Apples Association and apple export, Serbian companies on Amazon, and aggregative business models/ILC ✓ Good cooperation has been established with the regional EDGE project, which is proof that CSS is recognized as the most important partner of the F&V sector in Serbia. CSS and EDGE organized a joint regional event on ICT in agriculture and supported BFS in attracting more companies from the region. Several other topics of interest to Serbia and the region were identified, which they will work on in the coming period.

Communications partnerships for tangible results: The Project is giving promotional support to partners and joint activities in order to maximize their communication impact through overall online presence, support in social media campaigns, PR, and in creating an attractive narrative and design of promotional materials. The following activities were supported in this area:

Table 2: Promotional activities with significant in-kind support by the project communications Activity Partner CSS Support Info Sheets for farm- MoA Production of info sheets, largely reflecting Global GAP standard ers and growers dur- practices, aimed at mitigating risks associated with Covid-19 ing Covid 19 crisis transmission in F&V production and handling. The info sheets were being distributed to small-scale farmers and growers through AES local office network across the country. SFTC web site Serbian Food Technol- Support in content creation for the website ogy Council SPLA web site Serbian Private Label Support in content creation for the website Association New visual identity de- Serbian Cold Storage Logo design and application on promo materials (visit cards, sign Association memorandum, roll up…), basic book of graphic standards Brochure design and Cooperative Union of Design of promotional brochure; support the website content crea- support with website Serbia tion content

Annual Report Y4 52 Activity Partner CSS Support Promotional material AgroNET Design of promo materials for the professional AgroNET wine and improvement of course (roll up, certificate, ID cards, e-invitation, visuals design for overall promotional social media); support in content creation for social media. activities Serbia Does Fruit plat- Serbia Does Fruit Advertisement design for Eurofruit magazine, October issue; new form promotion web site layout design; Promotion of the Inno- Divac Foundation Support in video creation; Social media vative Revolving Fund Oblachinska PR sup- Desing/ Center for De- Promotion of oblachinska products launch port velopment of Innovative Products Made with Oblachinska Cherries Prokupac Day event Vinska kultura Support in PR activities; event filming/video report creation; Belgrade Food Show APSF Organization one of the panels at BFS 2021 online conference on e-commerce topic AgBg fair Top Events Team Support with social media content ICT innovations in ag- EDGE Co-organization; design of promotional materials; promotion riculture event

Promotional events

Bonnie Glick, USAID Deputy Administrator visit to dm drogerie Markt (September 22): USAID Deputy Administrator Bonnie Glick along with USAID Mission representatives visited the dm Drogerie Markt (dm) to learn about innovative private sector-led support model for SME piloted together with the CSS. Radoje Krajišnik, dm incubator Project Manager, showcased recently developed food products through the Project supported dm Incubator. They discussed the sustainability of the business support model for SMEs created through a joint collaboration between private, public, and academic sectors. Despite the COVID-19 lockdown, sales figures for the dm Incubator products have been higher than expected, reaching Radoje Krajisnik showing dm incubator products $300,000 with 73,000-plus units sold in less to (left to right) USAID Deputy Administrator than a year. Ms. Glick was briefed on how dm Bonnie Glick, Mike De La Rosa, Shanley and the Project pioneered this first-of-its-kind Pinchotti and Aleksandra Zorić Kržić from USAID Serbia retail incubator in Serbia and helped pave the way for small businesses to market their products through improvements in food technology, design, branding, access to finance, marketing, and market access through dm stores in Serbia and other countries.

Belgrade Food Show (November 23-25): For the third consecutive year in a row, the Associ- ation for the Promotion of Serbian Food (Association) organized the Belgrade Food Show (BFS) on November 23-25.

Annual Report Y4 53 Over the past two years, the Project has supported the BFS and building the As- sociation’s capacity to establish BFS as a central event in Serbia and the wider region for networking, knowledge exchange, and B2B in the premium food segment, mostly dominated by micro and small firms. This year’s show was organized online due to the COVID-19 pandemic. It received only limited technical support from the Project, while financial backing was raised from vari- Participants at the "Online Food Sales - Today, Tomor- ous other market players, from the pri- row and Forever" panel: Anja Đurić (Donesi.com), Goran Kovačević (Gomex), Vasilije Ćetković (KoVoli.com), Tat- vate sector to local and national govern- jana Avramov (Real Red Raspberry) and Dejan Ranđić ment entities. This implies that the BFS (Moderator) has successfully gained market attention and has become a relevant player in the local food production sector, offering key services to specialty food producers in marketing and promotion. BFS was supported by the Ministry of Agriculture, Faculty of Agricul- ture, Serbian Chamber of Commerce and Industry, the Hotels and Restaurants Association, and other state institutions, organizations, and companies. Around 90 Serbian exhibitors from the fruit and vegetable, meat, and dairy industries, and 20 SMEs from the Balkan region, had an opportunity to showcase their premium food products at BFS 2020. The greater presence of regional participants at this year’s event is also the result of cooperation between three USAID-assisted projects – the Competitive Economy Project in Serbia, the Regional Economic Development, Governance and Enterprise Growth (EDGE) Project from North Macedonia, and the Fostering Agricultural Markets Activity (FARMA II) Project from Bosnia and Herzegovina. The three USAID-funded projects assisted the B2B segment of the event to strengthen greater regional networking among companies and facilitate new market access. In total, around 95 B2B networking meetings were organized between participating companies and 30 prospective buyers and traders. Around 1,200 delegates had an opportunity to learn about key industry issues from more than 35 European and local experts, officials, and company representatives related to a variety of topics. These numbers represent successful continuation from the previous two shows, testifying to the market-driven scale-up of this activity. Filling the gap in promotional market space for specialty food, BFS is becoming one of the leading trade events and conferences in the region.

The final conference of the Serbian Association of Managers (SAM) Mentorship program 2020 (November 25): SAM and the Project partnered at the end of 2019 to strengthen the competitiveness of the food industry in Serbia in terms of successful innovations, youth inclusion, and strengthening entrepreneurship. Part of that cooperation involved supporting selected Pro- ject partners in SAM development programs to improve their knowledge and skills and create new business connections. Representatives of six companies participated in Mentorship and Mastermind programs throughout 2020. Three of them, young entrepreneurs from the food processing industry, participated in the SAM Mentorship Program 2020 for the first time. The Program provided experienced managers (mentors) to transfer knowledge and experience to younger, less experienced managers (mentees). On November 25, the final conference of the Mentorship Program 2020 was held, where 8 out of 29 mentors and mentees presented results of their 9-month partnership. One of this year’s participants was Project partner Ana Dolovac from Dolovac Organic, an organic F&V producer from Futog. With her mentor, Ana presented

Annual Report Y4 54 their "Business with a Purpose" project focused on re-branding and re- positioning Dolovac’s products on the market, building a new company website and opening new online sales channels. The project was voted the best mentoring duo of this Ivana Jelovac, mentor (Black Box Advertising) and Ana year’s SAM Mentorship Program. Dolovac, Dolovac Organic (mentee) present their projects at The online conference was attended the final conference of the SAM Mentorship Program by 100 participants and registered over 150 views on YouTube. Previously, three Project partners participated in SAM’s 6- month Mastermind Program to support senior managers to improve their business knowledge, better understand market requirements, and overcome typical problems encountered by entrepreneurs. Managers from Agrobel, Green Energy Group and Flora successfully finished the Pro- gram and, in the process, improved their business operations and personnel skills by sharing experiences and know-how in a group environment.

Svet Hoće Domaće (I2-12) The Svet hoce domace (SHD) platform showed its full potential in Y4, which was marked by the Covid-19 crisis. As an online educational and promotional platform for domestic specialty food products, SHD quickly adapted to the new circumstances. Launched in September 2018, the platform built a significant fan base (26,499 on Facebook and 5,637 on Instagram) and cooperated with numerous producers. As such, it was the perfect place to implement activities intended to support domestic food producers in challenging times. In late March 2020, the Project launched a series of webinars to support producers, increase access to the right information, and facilitate exchanges on key issues that would help producers tackle the COVID-19 situation easier. The webinars become the meeting point for the industry actors to share ideas to help handle initial confu- sion, panic, and change in consumer demand. Eight webinars were organized on a weekly basis: > The food industry in challenging times > Online sales: Necessity or the Future > Fresh segment - obstacles and opportunities in a time of crises > The current situation in the HoReCa sector > Financing in Agriculture and the Food Industry > Green markets and new horizons > Buy Local: Phrase or Reality > Brand Communication and Loyalty – What the Crisis Taught Us

Annual Report Y4 55 All sessions were followed by almost 1,000 participants with live discussions and many questions for the panelists, proving the high relevance of topics and their significance for the industry. Furthermore, these events were highly shared among participants, and media representatives showed increasing interest, with more than 100 articles published. After a successful series of webinars ended in late May 2020, the summer months were dedi- cated to planning and preparing the comprehensive online campaign SVET HOĆE DOMAĆE. A TI?

Svet hoće domaće. A Ti? online campaign (November 2020 – February 2021)

Svet hoće domaće. A Ti? (World wants homemade. How about you?) online campaign was launched in November 2020 to promote the importance of the domestic food industry, encourage youth to be more interested in agriculture and the food sector, promote innovation and food entrepreneurship, and help continue the transformation from traditional to modern agriculture. The effort also promotes key success stories of the Project and USAID.

The campaign’s leading communication tool was a series of videos sharing inspirational stories of tradition, innovation, perspective, and new generations, key pillars to developing the Serbian food industry. Video participants included producers, companies, academics, and experts from a total of 23 selected Project partners from various parts of Serbia. They shared their experiences, development paths, and difficulties and successes, and also covered topics related to Serbian traditional varieties and products, innovations and technologies, entrepreneurship, and international markets. The campaign was launched on SHD (Facebook, Insta- SHD video making (AgroBel company) and Instagram campaign gram, Youtube) and CSS so- design sample cial media channels (Face- book, LinkedIn, Twitter) with a video Tradition, followed by three more – Innovations, Perspective and New Generations. The campaign ended at the end of February with a fifth “best of” video that summa- rized all previous ones and thus covered the most important aspects of the domestic food industry.

Public reactions were great with excellent engagement - engagement rate was around 65% on the CSS FB (66.52%) and SHD FB (64.82%) pages. This is an extraordinary result in line with significant video views – 445,260 views on CSS and 473,886 on SHD channels.

Intensive communication efforts during 2020 and 2021 led by a series of online events at the beginning of the COVID-19 crisis and followed by a very successful online video campaign additionally influenced the high visibility and recognition of Svet hoce domace as a unique platform for support and development of domestic food products. For the SHD platform to continue evolving and remain sustainable after the completion of the CSS Project, at the end of Y4, brand ownership was transferred to DNA Communication, the creative author of the SHD visual identity and co-creator of the platform. Going forward, DNA is planning to develop the platform further; expand the promotion of a broader range of food

Annual Report Y4 56 industry participants; actively cooperate with other industry initiatives and organizations; improve the image of Serbian food locally; promote the need for change and capacities improvement of producers; engage young people; and position Svet hoće domaće as a unique place for promotion of (high) quality local food, and ensure its sustainability.

CSS Communication Channels CSS continues to promote all its activities through CSS communication channels in line with USAID communication and branding strategy. Additionally, the Project continually adapted to the COVID-19 pandemic, leveraging traditional PR and marketing and social media to promote its activities and partner organizations. Y4’s focus was on promoting success stories, online video campaigns, online and offline events, educational panels, and online trainings. Some highlights include: 1. Project communication channels saw an increased number of fans and engagement in Y4. Facebook reached 50,133 people, while LinkedIn reached 3,531 and Twitter had 415 fans. 2. Fanbase increment in Y4 was significant. The Facebook page has gained 5,931 new fans, on average nearly 500 new fans monthly. LinkedIn page has gained 450 new fans, or 40 new fans on average monthly. The Twitter page has gained 34 new fans, or 3 new fans on average each month. 3. The SHD video campaign Svet hoće domaće. A Ti? achieved significant reach and engagement on social media. Through Project partners such as producers and experts as participants, sharing real stories, and high-quality materials, users across CSS and SHD channels were particularly engaged. Videos from the SHD campaign were some of the most share- able posts on social media channels.

Impressions Engagement Reach Eng. rate Number of posts Fans Facebook 6,869,032 646,032 3,903,978 17% 195 50,907

Impressions Number of clicks Social actions Number of posts Followers LinkedIn 304,307 14,359 7,156 185 3,537

Impressions Engagement Eng. rate Number of posts Followers Twitter 99,870 1,962 3% 154 416

Impressions Total views Number of videos Subscribers YouTube 19,540 12,892 28 83

Media and Social Media Monitoring In most media appearances the Project was mentioned as an initiator of each activity which is resulting in very successful PR campaigns. USAID and the Project remain recognized by media representatives as important supporters and trend setters in the food industry. Media support included print (33), online (319), TV (21) and radio (3) appearances – a total of 376 appearances. The sentiment was 100% positive. USAID was mentioned in 375 articles. The most followed topics were Svet hoce domace webinars, Oblachinska promotion, Revolv- ing fund launch, Prokupac Day and Agro Belgrade.

Annual Report Y4 57 COVID 19-CONTEXT

✓ The Project addressed important topics in the food industry worldwide by sharing industry members' analysis, surveys, and reports published in European and US Associations, specialized magazines, and bulletins. CSS social media platforms featured educational materials and expert presentations delivered at the BFS events, as well as at the Agro Belgrade Fair 2020. ✓ In partnership with the MoA, the Project developed instructions and communicated to the industry how to protect individuals from contacting COVID-19 in the field and in processing facilities. ✓ Just two weeks following the announcement of emergency measures, the Project launched the first online webinar as a part of the Svet Hoće Domaće platform. It was the beginning of a successful series of events which gathered the food industry and opened important topics with the aim to help them to handle crisis better. ✓ All planned events were successfully organized, most of them in an online format

Annual Report Y4 58 Annex A: PMP Table

No Data Collection Schedule of Baseline Targets Actuals Indicator Type and Unit Method collection Purpose: Eliminate obstacles to Serbian competitiveness to generate export-led growth and greater integration with European and global markets (linked to IR 2.2: Private Sector Networks Strengthened to Enhance Competitiveness) P-1 Percentage increase of sales of firms Custom / Outcome Survey Annual 2.56% Y1: +0% impacted by USG-funded assistance Percentage (median 2015-2017 sales Y2: +4% Y2: +10% growth of the 101 companies Y3: +8% Y3: +6.6% from the baseline survey) Y – Calendar Year Y4: +11% Y4: +15.4% LOP (Y1-Y4): Y1-Y4: +32% +25% Y5/6: +5% Description: The firms that received CSS support were expected to increase their sales performance by nearly 25% LOP. The increase is expected to come through accessing new buyers/markets, increasing value by adopting new certifications or new technologies, or through the expansion of production which translates into an expansion of physical infrastructure and product sourcing base, both employment and investment generators. It’s expected that new buyers and certifications will be facilitated in years 1 and 2, while new technologies or investments in expanding existing production potential will come in later years. In the final two years, the focus will be on the companies that operate in underdeveloped regions. CSS assumes the regulatory environment remains constant, currency exchange remains steady, and no significant weather occurrences negatively influence production. Targets/Actuals: CSS targets represent percentages points of annual growth by the CSS-impacted companies (the “treatment group”) above the average industry growth rate. The average industry growth rate is determined as the growth rate of the group of non-CSS-impacted companies (the “control group”). Actuals are determined at the CSS Annual Assessment / Survey of companies. In the Y2 median growth rate of the treatment group was 11% and the control group 1%, making the actual value +10%. In the Y3 median growth rate of the treatment group was 6.6% and the control group 0%, making the actual value +6.6%. In the Y4 median growth rate of the treatment, group was 15.4% and the control group 0%, making the actual value +15.4%. Sub-Purpose 1: Market Competitiveness of Selected Value Chains Increased (linked to Sub IR 2.2.1: Selected Value Chains Developed) 1-1 Number of firms receiving USG- Standard / Output Activity Records Quarterly 0 Y1: 20 Y1: 21 funded technical assistance to export Y2: 35 Y2: 147 (new firms) (EG 2.2-1) Y – Program Year Y3: 55 Y3: 101 (new firms) Y4: 80 Y4: 40 (new firms) Y5/6: 19 Y1-Y4: 309 (distinct firms) LOP: 328 (309+19) Description: The indicator counts firms included in the CSS activities marked as “export-support activities”. Each participating firm is only counted once. Targets/Actuals: The Y1-Y2 targets were established based on a projected reach of initial activities in engaging these firms, and the subsequent growth of this target tied to evolving sector services that should build on demonstrated success, continue to attract more firms, as well as the possibility that the Activity will branch into new VCs or product sets as replication and scaling take place. The actual values show the project managed to involve much more companies in the first couple of years than anticipated. Subsequent actuals seem to be lower than previous as not all firms annually participating in the activities are counted but only new firms, not previously counted in this indicator. Small-holder farms have not been counted in this indicator, as well as firms participating in activities not directly related to export-support. The LOP target was updated at the start of Y5 to reflect achievements from Y1-4 and Y5/6 targets.

Annual Report Y4 59 No Data Collection Schedule of Baseline Targets Actuals Indicator Type and Unit Method collection 1-2 Number of private sector firms that Standard / Outcome (me- Survey Annual 0 Y1: 20 Y1: 29 have improved management prac- dium) Y2: 30 Y2: 77 (new firms) tices or technologies as a result of Y3: 45 Y3: 74 (new firms) USG assistance (EG.5.2-2) Y – Calendar Year Y4: 60 Y4: 58 (new firms) Y5/6:29 Y1-Y4: 238 (distinct firms) LOP: 267 (238+29) Description: The indicator counts the number firms who have confirmed the participation in the project activities resulted in the actual improvement of their management practices and/or technology. Targets/Ac- tuals: The project anticipates that at least half of the firms targeted under EG 2.2-1, plus at least additional 30 firms targeted by financial services, and 30 firms targeted by workforce development services, will adopt new practices/technologies as a result of the project interventions. The Y2 target was exceeded as the project had some interventions attracting more companies than expected – most notable the Belgrade Food Show trade fair, a single event that attracted 73 SMEs. Not all CSS activities are designed to improve the management practices or technologies, and not all firms have taken part in the annual survey and were able to report on the improvement. Each firm is counted only once regardless how many improvements did happen over the years. The LOP targets was updated at the start of Y5 to reflect achievements from Y1-4 and Y5/6 targets. 1-3 Number of business linkages be- Custom / Outcome (low) Activity Records Quarterly 0 Y1: 0 Y1: 15 tween Serbian food processors and Y2: 20 Y2: 111 local, regional and international buy- Y3: 25 Y3: 174 ers Y4: 306 Y4: 35 Y1-Y4: 606 Y5/6: 20 LOP: 626 (606+20) Description: Business linkages within this Indicator is quantified by the number of contracts that have been established as a result of CSS activities. These contracts are counted if they are related to executing sales, receiving consulting assistance, or buying new technologies from a) firms in export markets or b) retail chain/HORECA in domestic markets. Targets/Actuals: The actual values are determined both by CSS activity records from direct communications with project partners and through the Annual survey. The LOP target was updated at the start of Y5 to reflect achievements from Y1-4 and Y5/6 targets. Sub-Purpose 2: Business Support Systems Coordination Strengthened (linked to Sub IR 2.2.2 Economic and Business Development Services Enhanced) 2-1 Networking index Custom / Outcome (low) Survey Annual 35 (by the 116 firms from the Y1: +0 baseline survey) Y2: +4 Y2: +6 Y – Calendar Year Y3: +4 Y3: +4.9 Y4: +5 Y4: -4 Y1-Y4: +6.9 Y5/6: +5 LOP: +11.9 (6.9+5) Description: The composite Networking index consists of 4 equally weighted parts: A) Business Association Membership (1. is a member, 2. membership has benefits, 3. benefits justify membership cost), B) Participated in Technical Trainings, C) Participated in Business Trainings, D) Collaborated with Research and Educational Institutions. The maximal value of the index is 100 points (4 * 25). Baseline was determined

Annual Report Y4 60 No Data Collection Schedule of Baseline Targets Actuals Indicator Type and Unit Method collection from the CSS Baseline Assessment of Fruit and Vegetable Value Chains survey of 116 firms (survey networking questions 1, 2, 3, 4, 9, 6): A1 45%, A2 80%, A3 54%, B 20%, C 27%, D 34%, with formula NI=25*(1/3 A1 + 1/3 A2 + 1/3 A3 + B + C + D) / 100 = 35. Targets/Actuals: Targets were initially set to increase LOP by 13 index points. Actuals are determined at the CSS Annual Assessment / Survey of companies. In the Y3 the networking index increased 8.8 points compared to the surveyed companies' baseline data (baseline is the year prior to project entry). In the Year 4 due to Covid-19, Network Index contracted by 4 points. Therefore, the Y5/6 target has been set at the same value as Y4. Sub-Purpose 3: Resources for Enterprises Growth Mobilized (linked to Sub IR 2.2.3: Resources for SME Growth Mobilized) 3-1 Percentage of SMEs in the selected Custom / Outcome (low) Survey Annual 48% Y1: +0% value chains using external sources Y2: +4% Y2: +3% of finance Y3: +3% Y3: +2.5% Y4: +8.8% Y4: +3% Y1-Y4: +14.3% Y5/6: 0 LOP: +10 Description: Based on the baseline figure of 48% of firms already using external sources of finance in 2016 (the group of non-CSS-impacted companies from the baseline survey of 116 companies), the project will look to increase this percentage through a set of financial interventions, while paying particular attention to investment finance. These growth percentages assume a relatively steady domestic lending market and an increase in investment opportunities, partially due to the project, beyond lending. Targets/Actuals: The original target was to increase the percentage of the F&V firms using external sources of finance by 10 percentage points. Actuals are determined at the CSS Annual Assessment / Survey of companies as an annual average percentage change (comparing the actual year to the previous year). The LOP target was updated at the start of Y5 to reflect achievements from Y1-4 and Y5/6 targets. 3-2 Value of new private Custom / Outcome (high) Survey, Annual, 0 Y1: 0 Y1: 0 sector capital investment in targeted Activity Records Quarterly Y2: 0 Y2: $507,400 value chains leveraged through Y3: $10M Y3: $14,057,700 USAID Y4: $10M Y4: $12,663,753 Y5/6: $4M Y1-Y4: $27,228,853 LOP: $31M ($27+$4M) Description: New investments in the sector are tied to a complicated set of factors, including market perception and building capacity of firms to attract and receive investment. It is expected that financial trainings and technical assistance to SMEs, support programs with banks, technology exposure missions, and new contracts, will lead to increased capital investments in the industry. Targets/Actuals: The investments will likely start to realize in later years of the project and CSS has established a LOP (Y1-Y5/6) target of USD 33 million, considering that the primary target sector are SMEs with low-value processing performance, and without the capacity to make capital investments. CSS assumes that if exporting firms’ performance is increased, then those firms will be more attractive to investors leading to new investments. The target has been exceeded due to a couple of recently approved very large investments (four investments are over a million USD). The LOP target was updated at the start of Y5 to reflect achievements from Y1-4 and Y5/6 targets.

Annual Report Y4 61 Annex B: Progress against Year 4 Workplan Access to Markets # Intervention Partner Output Period Status Access to Market for Fresh, Frozen and Specialty F&V Sector I2-4 Industry Associations (building capacity of the existing I2-3; development of the new I2-4) Capacity Building of Serbian Fresh F&V Firms and International Mar- Strengthen international promotion of Serbia’s fruit industry, under the umbrella of Agrobrand Jan -Dec 2020 Completed keting, Branding and Promotion of the “Serbia Does Fruit” brand Serbian Fresh Fruit Segment Capacity building of Prune Pro- NAPP, Con- NAPP initiated first contacts with international buyers through specialized B2B Apr-Jun ducer Association (NAPP) sultant (Dried) meetings; B2B meeting and foreign buyers field visits conducted in June (Derby Ingredients and Whitworths) Website for NAPP developed Completed Increasing export in the retail sector in selected international markets, to increase sales and add value to the product (PL arrangements). NAPP will work with its members and international buyers (e.g. Italy) to organize a technology/capacity- building study tour and organize a visit of the international buyer(s) in Serbia. Capacity building of t Serbian Asso- (Frozen) Capacity building of ACS; Application of machinery in berry harvest; expansion to Feb 2020-Jan ciation of Cold Storages (ACS) Asian and other markets as a result of market research, analysis and participation 2021 Ongoing in online B2B events. I2-9 Development of market chains in Increased knowledge of F&V processing cooperatives in Serbia, products and pro- order to improve the work of agricul- cesses improvement and subsequent competitiveness and sales growth. Provided tural cooperatives and subcontrac- Cooperative support to selected members of the Cooperative Union of Serbia (CUS), who either Apr -Dec 2020 Ongoing tors Union of Serbia already produce or have the capacity to produce high value shelf ready products, to improve product quality and production process and gain better access to markets. Business Support Systems Coordination Strengthened I2-8 Industry Lead Companies as Market Integrators 5 Industry Lead Companies inte- ILCs Partnership with 5 ILCs to implement aggregative business models (i.e. forms of Jan 2020 – Jan grating VCs in F&V sector contract farming, aka Hub & Spoke), particularly in underdeveloped parts of Ser- 2021 (‘Hub&Spoke’) activity (Delta Agrar, bia, to create opportunities for a larger group of farmers/producers to access high- Pureberry, AgroBel System, Menex standard domestic and international markets and efficiently utilize inputs, know- Completed and Frutorga) how and technologies. 5 ILCs conducted of group and individual trainings with the fruit/vegetable growers regarding advanced production techniques, food safety measures, and quality standards (98 number of trainings: 398 number of farmers).

Annual Report Y4 62 Access to Markets # Intervention Partner Output Period Status 2 ILCs implemented ITC systems to improve the efficiency of their value chains and marketing (Delta Agrar and Menex). Mentoring activity regarding the im- ILCs Two project FTOs conducted series of 26 training sessions with 13 beneficiary Jan – Oct 2020 provement of organization systems companies to improve their value chains in F&V production. The focus was to im- and quality standards with benefi- prove the organizational capacities of the companies to include more family house- ciary companies. holds and build trust and long-term relationships with them (implementation of Completed Hub&Spoke model). Besides, companies received training in food safety, including measures to cope with COVID-19 pandemic and sustain successful operations within the value-chains. I1-5 Business Support Services: Hubs and Incubators Creation of Oblachinska Cherry DESING Promotion of "Oblačinska/Oblachinska" sour cherry as a recognizable Serbian brand and international promotion brand in the world as a part of the broader effort in creating and promoting geo- Ongoing of new products based on the gen- graphical indication (GI) products based on original Serbian fruit uine Serbian fruit variety. I1-6 Development of Innovative / Integrative Business Models and Services CSS has signed a grant agreement with the Serbian Food Technology Council Development of technology trans- (SFTC) for the Development of technology transfer and innovations support net- fer and innovations support network in August 2019. SFTC will help create a tailored zero-waste model and de- August 2019 - Completed SFTC work velop innovative ways to transform food production waste into new, innovative, October 2020 shelf-ready products. Six companies and four cooperatives will benefit from the activity. 50 new products were created as a result of the activity. Small wool ECO-packaging for Organika nova Support micro, small and medium enterprises (MSMEs) holding scalable, innova- September

fresh food tive food packaging solutions by integrating principles of Smart Specialization 2020- March Ongoing

Strategy in the F&B packaging industry 2021 Antimicrobial Active Packaging MTM Sirela Support a small enterprise holding scalable, innovative food packaging solution by September Ongoing integrating principles of Smart Specialization Strategy in the F&B packaging indus- 2020- March try. 2021 Improving of trade and export ser- Top Events AgBg conference 2021 September Ongoing vices for F&V sector firms through Team 2020 – May

education, trade shows and B2B 2021 organization

Annual Report Y4 63 Workforce development # Intervention Partner Output Period Status Educational system improvement I2-5 Work with academia on the development of short-term innovative certification courses Professional Certification AgroNET, Creation of 2nd specialized certification course in partnership with UC Davis: March 2020 – Courses UC Davis, PCBT 2 and the New Course (NC) this time targeting intensive, high-tech produc- March 2021 Completed tion in the close environment (greenhouses and glasshouses) Industry survey and Needs As- AgroNET, 2nd Industry needs assessment survey done (for both courses: PCBT 2 and NC) March – June sessment of the companies UC Davis, The company needs assessment questionnaire finalized and sent to selected Completed companies Companies responses collected and analyzed by AgroNET New short specialized course New Course Curriculum developed July – Oct Completed created (NC) and implemented New Course advertised and participants registered New course implemented Up to 40 participants/company representatives attended the course in Knic on 24- 26 Sep; (due to the COVID situation, the number of participants is decreased to 20) Wine training organized based AgroNET Wine training curriculum developed June – Oct on the Modification of the Sub- Training held for 20 wine producers in Prokuplje (it will be held from 22-24 Oct) Completed Contract with AgroNET Improvement of the "Posthar- AgroNET, Info Days organized in three locations for the company representatives to promote July 2020 – vest Technology and Biology UC Davis, the courses (info days were not held in June/July/Aug, but some form of Info days March 2021 (PTBC) " that was piloted in will be organized in Sep/Oct to promote the Course) 2019; (based on the evaluation Concept of the PCBT 2course defined and developed (theme, lecturers, teaching and lessons learned from 2019) methods, advertising tools) Completed Pilot course advertised to the Serbian Companies. Participants selected for the PCBT 2 & Manual for PTBC2 created Wine Post-Course survey con- AgroNET The post-course survey sent to the participants who attended the training to check Nov – Dec Completed ducted the applicability of the knowledge gained at the course PTBC2 implemented AgroNET, List of the selected course participants submitted. Dec 2020 – Completed UC Davis March 2021

Annual Report Y4 64 Workforce development # Intervention Partner Output Period Status Implementation of the improved PCBT 2 course conducted with UC Davis assistance; 35 participants from companies trained in export/marketing & new technological practices Field visit to industry facilities for all course participants organized; Participation of UC Davis experts in the course PTBC2 - visit Serbia; due to the COVID situation, UC Davis team will give an online lecture in December Course Evaluation done I2-10 Work with companies on developing new educational models I2-10.1 LUKOWA Académie 2019/20 LUKOWA Improved program of the Lukowa Académie created Nov 2019 – Realization of the internship program 2019/2020 June 2020 Lukowa Académie contributed to the company’s capacity building; Completed As a result of the program 2019/20: 1 student hired; 8 students completed internship; Sustainability plan for the independent LUKOWA Academie developed I2-10.3 Education improvement Sirogojno The idea to be developed with the partner; it requires identification of the educa- Canceled through the development of an tional institution that is interested to participate in this partnership; subcontract Canceled due COVID extension program for farmers signed with the leading partner in this activity. Possible cooperation with US edu- 19 cation institution for knowledge transfer Industry Associations (Eco- SAFT - Serbian Co-funding of the Ecotrophelia competition (funding direct costs for the organiza- Sep-Oct 2020 trophelia students' competition) Association of tion of Ecotrophelia); other program costs will be funded by the MoA; National food technolo- competition Ecotrophelia held in September 2020; the winning team from a na- Completed gists tional competition to participate in EU competition (at SIAL), which will be held Online; promotional activities;

Annual Report Y4 65 Access to Finance # Intervention Partner Output Period Status I3-1 Financial trainings for SMEs to Sim Cert, 20 companies ready to immediately perform tangible investment based on the 2020 Ongoing stimulated demand for finance ARDA, MSCon- completed business/investment plan sult, Valor 20 companies ready to immediately perform tangible investment based on the completed business/investment plan Y4: $10 million of tangible investment (Y3 & Y4 20 million investment) I3-3 Possible mobilization of an SME Valor 1 Completed feasibility study for establishing AIF for agribusiness Initiated proce- 2020 fund with the focus on the agri- dure for establishing AIF (if feasible) Completed business sector Divac Founda- tion 2. Mobilization of private-public revolving fund for small agricultural producers Ongoing I3-4 Support USAID Mission to es- ProCredit bank Facilitate utilization of DAC guarantee. Provided info sessions and direct technical 2020 Ongoing tablish a credit guarantee Addiko bank assistance in preparing investment plans for clients applying for loans with DCA guarantee including clients from underserved region/clients

I3-5 Working with MOA on develop- MOA Detail analysis of Serbian potential for investment in the food processing industry 2020 Completed ing a new approach to attract based on the region specificity/potential for development F&V industry FDI based on the results from Agriscape 2019 I3-7 Working with individual Consultants - Increased number of firms investing in modern processing technology or investors 2020 Completed Investors and / SEVEN, TBD willing to invest in the food processing industry Investment funds Investment fund - TBD

Annual Report Y4 66 Annex C: Success Stories

Success Story #1 (Y4Q1) Supporting small-scale fruit and vegetable growers in Serbia – a model that works! Integration of small fruit and vegetable farms into mainstream value chains represents a new chance for Serbian agriculture. Situated in the middle of south-east Europe, Serbia possesses an excellent combination of sunny climate and soil quality for growing a variety of high-quality fruit and vegetables. Ser- bian agriculture is still characterized by mostly small and fragmented farms, who, despite their love for the land, lack access to the mainstream markets, both domestically and internationally. This is partially a consequence of the country's transition from the former socialist system, when larger production complexes and cooperatives fell apart and left small producers disor- ganized and detached from traditional trade flows. This process also caused a delay in adopting new cultivars and varieties, growing techniques, technology, food safety and quality standards. These are all critical factors to compete on volatile markets and overcome the competition from the neighboring countries, Europe and even China. New, private sector firms that have emerged in the meantime mostly relied on their own, large scale/intensive production, or cooperative models with established, commercial growers. To address these issues, USAID’s Competitive Economy Project launched several pilots since 2017 with lead firms in Serbia to integrate a model most suitable for integrating a small, traditional grower in modern, commercial supply chains. One such pilot with RZ Agro produced one of the best examples of a sustainable and resilient business model for Serbia’s small farms and agricultural sector going forward. Since its establishment in 2003, RZ Agro has been focusing on importing and distributing vegetable seeds for famous seed and planting material producers, such as “Rijk Zwaan”, a reputable Dutch company. To promote new technology and modern growing practices among small farmers, RZ Agro established a private advisory team, to comprehen- sively assist farmers at all stages of their business. RZ Agro field specialists provide trainings, technical support to the farmers, advises them on successful technology, and supplies the farmers with Djurdje Spasojević, GM of RZ Agro and necessary growing inputs, provided by RZ Agro. RZ CSS team visiting one of the farms with gherkins production Agro thus provides one of the most critical market services – producer consolidation and organization. RZ Agro understands the importance of partnership and understood that in order to expand their business model and stimulate a growth of the producer network, a produce buy back options had to be introduced.

Annual Report Y4 67 “The goal is to keep the families, with no additional labor, busy for about 6-7 months per year on a ½ hectare farm. In order to achieve this, they need to be supported to grow two to three subsequent/parallel highly profitable crops per year. They need to be provided with full service – credit, inputs, extension etc., and most importantly, secured and transparent purchasing agreement. Each crop targets a net-profit of about 2,500 - 3,500 EUR per farm, totaling about 7,000 - 9,000 EUR per year,” says Mr. Djurdje Spasojević, of RZ Agro, “And this is on only one third of a hectare,” he adds emphatically.

RZ Agro, together with USAID CSS, thus produced a model to collaborate with small producers to not only grow, but also source F&V products, such as gherkins, strawberries, red peppers, and other labor-intensive crops, for large EU buyers. One of the company’s clients includes Karl Kuehne from Germany – a world leader in processing and packaging of gherkins. To satisfy the needs of the client, with support from the Project, RZ Agro integrated the initial 150 producers into a gherkin producing cooperative. Farmers are supported through provision of all-inclusive financial package that includes inputs, training, crop insurance, and support to introduce international food standards (such as Global GAP) to improve quality. This type of approach led to RZ Agro doubling the number of growers in its growing network from 150 to 300 by June 2019. As such, over this period, the total export value of gherkins alone increased approximately 30% year-over-year.

“Knowledge is often underappreciated in Serbia. It is time to change this attitude: it is not important who you know, but what you know,” says Mr. Spasojević.

RZ Agro contracted 40 (out of 300) farmers to produce a new variety of red pepper alongside with the gherkins. This significantly increased total profit generated by the smallholder farms. In 2020 RZ Agro again contracted an additional 20 smallholder farmers to introduce a new strawberry variety, with high yielding plug- plants produced in RZ Agro’s own re- RZ Agro’s Research Center in Guča: search center and strawberry mother plants ready for multipli- cation to plug plants nursery established in Guča, Serbia. Most strawberry seedlings were previously commonly im- ported from Italy. The strawberries grown from RZ Agro’s growing network will be delivered to Frikos, one of the biggest Serbian exporters of organic and conventional frozen berry fruits. The projected total yield in 2020 is expected to exceed 100 tons of first-class strawberries. By working through this model, traditional farmers from farm-fragmented Serbian regions can generate a sustainable livelihood for their entire family. Thus, if adopted by the rest of the industry, the model can lead to major behavior change in the way exporters view small producers and the way tradi- Research center as the basis for tional growers view agricultural production. This shift should production

Annual Report Y4 68 allow them to take a step forward toward becoming modern, sustainable farms, reducing rural immigration, and spurring additional investments and local development. The effort to upgrade the model did not stop there. With the support of the Project, RZ Agro started cooperation with Emco Cal, based in Chico, California. Emco Cal creates competitive strawberry, blackberry, raspberry, blueberry, and citrus varieties. This is a part of a broader effort by the Project to transfer best American know-how to Serbia, while building linkages between leading Serbian firms and American partners. Talking with Đurđe about his plans, he says: "Nowadays, the lack of workers is becoming a key problem for large agricultural companies in the EU and Serbia as well. This problem became even more accentuated in the EU during the Covid-19 crisis, as significant numbers of seasonal workers returned to their native countries in fear of losing jobs. We thus need to produce a viable business model that keep these people on their small farms. This presents an opportunity for Serbian export companies, as the country has many smallholder farmers that need to be organized, and we are continuing with our efforts in that direction." As with RZ Agro, the Project’s “hub and spoke” business model is currently being replicated by five other Project-supported partner companies. Additionally, this successful model is actively being transferred to 13 firms and cooperatives throughout Serbia, while being discussed and shared amongst industry stakeholders at the events such as Agro Belgrade, an international trade fair in Serbia supported by the Project. More firms are now realizing that to be sustainable over the long-term, small-scale producers and growers should be a necessary part of their export-oriented value chains. Similarly, small farmers are also seeing the direct benefits of shifting towards high value crop production. All told, a win-win relationship that helps all actors in the value chain is beginning to take hold in Serbia’s agriculture sector as more and more large companies and small farmers witness the mutual benefits of collaboration. It may take a little more time, but good ideas catch on fast.

Annual Report Y4 69 Success Story #2 (Y4Q2) Cardno Serbia Project Paves Way for Serbian Specialty Food Producers to Reach New Global Customers via Amazon The USAID Competitive Economy Project (CSS) pioneered and executed a model to structure trading and logistical support systems to bring Serbian premium food products to international markets. This new model helps open up global markets to expand sales and exports, promotes food entrepreneurship, and supports promising SMEs to grow and provide examples for others to follow. In Serbia, the food processing industry is a strategic growth sector for the country. Due to the many competitive advantages of Serbia’s fruit and vegetable (F&V) sector, there is a huge potential for growth and new business opportunities. Within its region, Serbia is the largest exporter of food products, and the only net exporter. The next step is now to penetrate wider international markets and compete on global scale. Soon after inception, CSS identified key obstacles and constraints preventing the further development of the food processing industry. Some of the key factors included low- value, shrink- ing domestic and regional markets, and lack of familiarity with consumers, distribution systems and buyers in broader, global markets. To evade obstacles, CSS worked with export facilitating partners and other stakeholders to create new sales channels (particularly e-commerce) for high-value Serbian food products with potential to compete in foreign markets, particularly in the US, the number one market in the world. Simultaneously, supporting platforms for improving technology, labeling and branding of products were being established. KoVoli, one of the Project’s export facilitation partners for specialty foods, embarked on a path to introduce premium Serbian food products to the US market. With experience running an e-commerce business in Serbia, KoVoli expanded its reach to facilitate enlisting at least 10 specialty food products on Amazon.com, a leading global online sales platform. Over a nine-month long process, KoVoli with partner stakeholders provided technical assistance to these food producers to adhere to Amazon’s strict rules and procedures related to online marketing campaigns, product labeling and visual identity standards. As a result, new Serbian products - including craft hot sauces, mushroom spreads and sugar-free raspberry spreads - have been available for purchase on Amazon.com since February 5th, 2020. Three Serbian specialty food producers, including Min Commerce with Gurman sauces, Stanišić Bio with Forest Secret spreads, and Real Red Raspberry with raspberry jams, have successfully started selling products over Amazon’s platform. Although the companies, due to COVID-19 restrictions, were prevented from being more active in terms of marketing and promotion in the US market, almost 2000 pieces were sold, with the bestselling product being Real Red Raspberry 80% fruit spread, followed by Plum sauce and Black Truffle Spread. The listing of Serbian specialty food products on Amazon.com marks a major success and a significant business opportunity for Serbia’s food companies to showcase their products and further penetrate the US market. It also shows the importance of consolidated e-commerce opportunities, especially those tied to global markets. All companies that worked with KoVoli had to prepare Amazon sales accounts, page profiles and listings for each product. Since listing, these 10 innovative products have been selling to customers across the US for the last 7 months. In the meantime, KoVoli food hub has already shipped the second batch of products to the US market. Real Red Raspberry is in stock, while Gurman sauces and Forest Secret spreads will be again available from January 2021.

Annual Report Y4 70 The product listings on Amazon have already had a big impact on these businesses, especially BioStanišić and Real Red Raspberry, two smaller producers. Both companies report that the positive media exposure helped them find new business partners and opportunities, mostly due to their success on Amazon. Real Red Raspberry had to significantly scale up Real Red Raspberry 80% Fruit Spread - https://www.amazon.com/dp/B082DQDQ14 production to meet new demand on Amazon.com, which is quickly becoming its main sales channel. These high-quality, innovative food products will also be offered to other US-based distributors and shops through KoVoli’s expanding activities in this market. KoVoli food hub has already established communication with over 70 gourmet shops, 150 restaurants and 10 key opinion leaders/influencers. Product samples were sent to over 30 establishments, which resulted in additional listings and sales in offline sales channels in US. At the same time, KoVoli is ne- gotiating with 6 additional Serbian producers to introduce them to the US market. Nikola Stanisic, owner of Forest Secret, talking about sales Going forward, these initiatives on Amazon for Serbian national broadcaster RTS most- started by CSS will continue to re- watched evening news move obstacles preventing Serbian specialty food producers from expanding sales and exports in the US and other high-value foreign markets. Importantly, following the closure of CSS, export support systems will continue to expand through new private label opportunities, new offline and online sales channels and, of course, more listings on Amazon. Undoubtedly, it’s expected that more companies will follow suit in the future.

Annual Report Y4 71 Success Story #3 (Y4Q2) Mobilizing New Sources of Finance for Serbian Agri-Businesses It is no secret that Serbia’s agriculture industry is a key strategic sector with great potential for growth—it already accounts for approximately eight percent of the country’s GDP. However, even two decades after the country’s politi- cal and economic transition process began, its pace still lags behind its potential, considering the country’s strategic advantages. Located near large European markets, Serbia has inherent competitive advantages in the production and processing of fruits, vegetables, grains and livestock. Lack of financial awareness and education, and finance and business management skills, coupled with the presence of bur- densome bureaucratic and administrative barriers all contribute to slower-than-expected growth and development of the agricultural industry. A key factor unlocking this potential is readily-available and accessible financing for small and medium enterprises. In general, agricultural SMEs are financed primarily by private resources, commercial banks and/or government loans and subsidies. However, financial loan products are primarily provided to larger firms, with limited resources available to small enterprises and start-ups—which often lack credit history, financial skills to prepare business and investment plans, and/or are unable to provide adequate real estate collateral. To address these shortcom- ings, the USAID Competi- tive Economy Project facilitated a loan portfolio guarantee scheme supported by USAID Serbia; the Serbian Ministry of Agriculture, For- estry and Water Manage- ment; and two local partner banks - ProCredit Bank and Addiko Bank - in December 2019. Originally dubbed “DCA Guarantee” (after USAID’s Development Credit Authority, which initiated and oversaw the process), it has since been implemented as the “USAID guarantee scheme.” It leverages joint financial resources provided by USAID and the Serbian Government (through the Ministry) to cover potential loan losses by commercial lenders. Specifically, the USAID guarantee scheme covers 60% of loan principal losses and incentivizes banks to provide up to $90 million in new loans to food processors and individual farmers over a 12-year period. The purpose of the guarantee is to mobilize partner banks to expand lending

Annual Report Y4 72 through an efficient and streamlined risk-sharing mechanism. It aims to support new investments, acquisition of modern equipment and launch of innovative business ventures—particularly for SMEs. This flexible financial product supports long-term lending with up to a 10-year maturity for a range of agribusinesses, including micro, small and medium-sized enterprises (MSMEs), food start-ups and entrepreneurs, agricultural associations and cooperatives, and registered small- scale growers and producers. The scheme extends to all segments of the agricultural industry, including the F&V sector, and places special emphasis on loans for start-ups operating for less than three years, and legal entities based in the country’s underdeveloped Southern and Southeastern regions. The scheme could not have launched at a better time, given that Serbia’s agriculture industry is undergo- ing a multi-year overhaul led by the Serbian government to strengthen its competitiveness. The Ministry of Agriculture, Forestry and Water increased the level of financial support and designed subsidized lending programs in coordination with private commercial banks and financial institutions. Addition- ally, the EU-subsidized IPARD program continues to be a major source of financing for large scale agricultural investment projects. The USAID guarantee scheme complements the overhaul by providing financial loans to investment-ready clients lacking sufficient collateral for traditional bank loans. In January 2020, two partner banks - Addiko and ProCredit Bank – commenced approving loans backed by the DCA guarantee. Both banks have reported that the scheme is an important new financial product for their clients and it represents a significant opportunity for the entire agricultural industry. Addiko and ProCredit Bank also praised the USAID guarantee scheme for its streamlined loan approval process. Most importantly, the scheme can be used in con- junction with other loan programs offered by international institutions (such as IPARD) and/or state loan programs to compensate for lack of collateral. Market interest and demand for this innovative product has been extensive, exceeding initial expectations of both banks—particularly among clients with new investment projects ranging from $300k to $2M. Both banks had already allocated over 80% of the first $10M tranche before March 16, 2020—when the Serbian government imposed restrictive measures in response to COVID-19. Interestingly, the resulting economic uncertainty generated further interest in the scheme. By September 2020, partner banks disbursed and approved around $20M in loans, and pre-selected or pre-approved over $10M in new loans to be disbursed from the second tranche of the DCA guarantee. ProCredit and Addiko Bank attribute the scheme’s quick utilization to technical assistance provided to SMEs, a large number of positive referrals through USAID’s Competitive Economy Project partner organizations, and the scheme’s ability to lower risk and exposure for commercial banks.

Annual Report Y4 73 The Project’s complimentary assistance program specifically targets industry innovators— leaders who are helping shift the agricultural sector’s outlook from traditional to modern. As- sistance included tailored mentoring sessions and business plan development for food processing companies in the F&V sector. Since the DCA guarantee’s inception, the Project has helped 11 SMEs to develop business and investment plans required to apply for the USAID Guarantee. This support led to the SMEs receiving loans totaling $8.7M in fewer than six months—investments ranging from new processing and laser sorting and packaging equipment to greenhouses and green energy projects.

Annual Report Y4 74 Success Story #4 (Y4Q2) Agro Belgrade – The ABCs of Agriculture in One Place

Despite Serbia’s numerous comparative advantages in fruit and vegetable (F&V) production, and significant investments made in the agricultural industry over recent years, there is still plenty of room to grow! Speeding a country’s transformation from traditional to professional agriculture requires targeted and continued effort over a long period. In the agricultural sector, professionalization is generally led by companies, entrepreneurs, and young people who take risks and approach agriculture as a business venture. These enterprising individuals usually gather knowledge about recent market trends, food standards and new technologies through a combination of self-initiative, personal relationships and attending major industry trade fairs and events. Given prohibitively high costs associated with some global trade shows, only a small segment of the industry is able to attend. This leaves many traditional producers out of touch with important industry-wide issues and topics, such as modern production practices, food safety and standards, market trends and export opportunities, and the latest technologies and innovations. Agro Belgrade for accelerated development USAID’s Competitive Economy Project supported Agro Belgrade (the first international, specialized trade fair for F&V and wine in Serbia), targeting the most promising export sectors with high investment potential. The goal was to create a new professional event where industry and the broader (Serbian and regional) public could learn about the latest trends in the F&V sector, new technologies and other key topics. Most importantly, the event had to be a long-term, sustainable platform for facilitating business connections, where regional producers would find opportunities to directly engage local and international buyers, distributors and retailers. Agro Belgrade (January 31-February 2, 2020 at Belgrade Fair grounds) was successfully organized through the collaborative efforts of USAID’s Competitive Economy Project, the Ministry of Agriculture, and the City of Belgrade.

Annual Report Y4 75 “The primary idea behind the event was to connect producers and industry experts to exchange ideas and accelerate of the fruit and vegetable industry in Serbia and wider region. During previous years, working with a large number of sector stakeholders, we realized that the agricultural scene in Serbia was rapidly changing to meet the standards and expectations of international markets. Through Agro Bel- grade, our aim was to prepare and educate F&V producers and smallholder farmers to increase exports of high-value processed fruit and vegetables products. We wanted to encourage participants to expand production in line with internationally recognized food standards, including organic, and ultimately increase exports of Serbian fruit and vegetables to global markets,” said Vladimir Živa- nović, General Manager of Top Events Team, organizer of the event. Exhibitors, conference and B2B networking Although designed as a smaller, targeted trade fair, more than 35,000 visitors and 500 exhibitors attended the three-day event—demonstrating its necessity. Attendees included F&V producers and purchasers, cooperatives and association members, agricultural equipment and machinery manufacturers, seed houses and nursery representatives, IT firms, retail chains and a variety of industry experts. The event’s conference program and business-to-business (B2B) networking meetings enabled producers and companies to establish contacts with leading retailers and manufacturers across the entire region. The associated conference sessions focused on pressing industry-wide issues that attracted substantial crowds. Leading industry experts and practitioners discussed: the latest trends in the food industry; Serbia’s export perspectives and positioning on the global market; inspection procedures related to food safety and export procedures; future prospects of organic production; available and upcoming financing options for agribusinesses; the current state of the agrarian workforce; successful integrative business models for associations and cooperatives; and market opportunities for berry producers (in addition to other topics).

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“We will definitely come back next year” Aleksandar Jalšić, owner of a strawberry and pear farm from Sremska Mitrovica, was also very pleased with the outcome of the trade fair. “This was a great event with excellent organization. We managed to meet a remarkable number of quality contacts, and we expect to establish fruit- ful cooperation in the near future. I was particularly interested to learn about technological innovations and new equipment, as protecting our orchards is a crucial part of our production process. I was pleasantly surprised by the variety of panel sessions and expert debates. In particular, information shared about bank loans and other financing sources for expanding my business. We will definitely come back next year.” Positive publicity leading up to and following the event generated extensive media coverage, with over 80 references across national, regional and local media outlets. A frequently-quoted statement by the Minister of Agriculture captured the spirit and purpose of the event: “Agro Belgrade is a unique event format that encompasses the entire agricultural value chain - from advances in production and new technologies to product placement and marketing. The focus is on advancing agriculture systems via modern production practices and processing systems, which are necessary for positioning the image of Serbia in foreign markets and to take a more decisive step away from traditional growing to professional production,” stated Branislav Nedimović, the Minister of Agriculture, Forestry and Water Management. In conclusion, the Minister added: “Next year, Agro Belgrade 2021, is well on the way to becoming a leading industry trade fair in the fields of fruit cultivation, viticulture and vegetable growing. It also represents a major new venue for the exchange of knowledge, best practices and new business opportunities for the Southeast Europe.”

Annual Report Y4 77 Success Story #5 (Y4Q3) AgroNet – Building Stronger Links between Academia and the Food Indus- try Serbian agribusiness have been experiencing constant progress over the past ten years, but there is still much to be done to catch up with the developed economies of the EU. Cooperation and inter-connectedness among key stakeholders operating in the industry have to be improved to stimulate impactful knowledge exchange. This is particularly visible when examining the lack of formal connections between higher learning institutions and the industry in Serbia. Much of the technical knowledge and innovation for the private sector in the past decade orig- inated abroad. This is primarily because universities in Serbia provide high-quality theoretical knowledge while lacking flexibility in responding to core industry needs. To take the country’s food industry to the next level, this gap has to be addressed. To develop a long-term sustainable solution for responding to constant changes in the market, USAID Competitive Economy Project (Project) supported the Belgrade University Faculty of Agriculture (FoA) to set up a flexible technical service center to the business community; i.e., innovative, short-term certification courses for staff development and life-long learning opportunities. The Project supported the FoA to establish AgroNet - Centre for Educa- tion and Research, founded by a team of distinguished FoA professors, to provide short certification courses based on US best practices. This delivery mechanism is supported by the new partnership with the University of California, UC Davis Post-harvest Centre (UCD), ensuring the transfer of knowledge and research between two universities and the most up-to- date solutions for the private sector. The collaboration process involved a visit by the UCD team to Serbia to UCD and AgroNet team visiting industry lead companies gain a better understanding of local across Serbia, April 2019 production, post-harvest, logistics, and marketing practices and challenges. Shortly after, the AgroNet team visited UC Davis on a study tour organized by the Project to attend the 41st Annual Postharvest Technology of Horticultural Crops short course. The goal was to gain practical exposure to short courses system and establish better connections between the two academic institutions. These visits resulted in AgroNet representatives working on a pilot short-term certification course for Serbian food processing companies, based on best-practice models implemented in the US. This joint effort resulted in the first certification course titled “Post-harvest Biology and Tech- nology.” To better understand the needs of the industry and tailor the course curriculum to address these challenges, AgroNet surveyed over 100 companies. Based on that feedback, the course was designed to assist food industry SMEs to adopt new practices and technologies and add new value to production. As a part of outreach efforts, AgroNet partnered with the biggest business association in Serbia, the Chamber of Commerce, to present the course to companies

Annual Report Y4 78 throughout the country. Through this partnership, they institutionalized it and ensured its sustainability. This partnership enticed interest in the course and secured an impressive turnout of participants in the first year – 36 local industry professionals and foreign guests from Monte- negro attended and participated in three days of technical training and two days of practical on- field training in December 2019. The response from the trainees was overwhelmingly positive:

“I was genuinely surprised by the sheer amount of quality information and insight gained from the course. It allowed me to learn more technical knowledge related to apple storage management systems and provided new insights and ideas for future practices. Specifically, we were introduced to particular species of solitary bees used for large-scale crop pollination. This year, we leveraged this information to deploy solitary bees to pollinate our apple orchard. The pollination results were truly excellent! We also met two of our new partners - Frutorga and Dilmano Dilbero – that took part in the training. And I even realized there was still time to apply for EU-funded IPARD grants and USAID’s DCA guarantee to further grow our business,” stated Nikola Marašević, Development and Investment Manager, DO- LINA MORAVE

Building on the achievements and positive feedback from the previous course, AgroNET continued to expand its portfolio of courses. The next one organized shortly after was a three-day course titled “Intensive production of vegetables & fruits in protected areas”. Based on participant feedback, the course was moved away from Belgrade into Knic, a local municipality in Serbia. Also, it was shortened to a three-day course. The course was attended by 30 participants, including F&V producers, agro-food company representatives, and local municipal representatives, and covered a range of The first certification course for professionals from the food topics related to the shift from tradi- processing industry in Serbia, December 2019 tional to modern/protected environment protection, responding to rapidly visible climate change and changing export market demands. The third course was focused on developing the wine industry, titled "Modern approaches to wine production with a terroir stamp". Par- ticipants came from both leading and emerging wineries in Serbia and discussed and brainstormed about currently hot various Wine industry certification course, October 2020 topics such as advantages of biodynamic approaches in wine production, digitalization of marketing and sales. Additionally, special focus was placed on Prokupac, a high potential autochthonous red wine variety, an emerging asset for the Serbian wine segment that is currently seeking its identity.

Annual Report Y4 79 “This is the first time a three-day training covering the Prokupac variety was organized for winegrowers. The variety has much winemaking potential, so this is a very important step for our wine industry,” stated Slavica Todić, Head of the Viticulture Department at the Uni- versity of Belgrade and Owner of Doja Winery.

The training received very positive feedback from attendees, as well as from the industry as a whole. Due to COVID-19, it was limited to only 30 participants, despite extensive interest to take part in the training.

“After successfully piloting our ‘Postharvest Technology and Biology’ course and newly designed short-term certification courses, we are now ready to deliver new courses going forward. We are adopting to online system, but also looking forward to on-site field visits as our trainings involve hands-on practical exercises in various types of production envi- ronments,” stated Bogdan Mladenovic, Secretary of AgroNet.

Going forward, the new tailored courses related to current issues and industry-specific topics will be developed. With more structured coursework available to address the specific needs of the business community, both large SMEs and small-scale F&V producers and growers will benefit in the future as employees have more and more opportunities to learn new skills and continue their professional development.

“The huge interest in our courses shows we’ve done a good job. In the meantime, we continue to improve cooperation between the public, private and academic sectors. Together, we represent a strong alliance to push forward innovation and advance economic growth. This is just the beginning,” added AgroNet Director, Dr. Vlade Zarić with a big smile.

Annual Report Y4 80 Success Story #6 (Y4Q4)

Municipality-level Revolving Fund Model Creates New Financing Oppor- tunities for Small Farmers and Growers in Serbia

As financial lending institutions in Serbia work to diversify lending products and offerings to a broader segment of the market, there still remains a gap between presently available financing options and agribusiness’ real-world financing needs. In general, access to finance for micro, traditional farmers remains a key obstacle preventing them to enter profitable supply chains, attract subsidies and credit and thus drive new investments in equipment and machinery needed to scale and grow their businesses. Specifically, there is a lack of financial services and programs available for micro clients operating in the agriculture and food processing industry, who are often perceived as “riskier” borrowers by local banks. This is partly because commercial lending institutions predominantly develop loan and credit products for small and medium- sized companies (SMEs) and large-scale industry clients. Additionally, few banks tailor products to accommodate business seasonality and the specific risks profiles of smaller agribusinesses. Further compounding the problem is the lack of other financing opportunities available to micro growers and producers. Presently, one of the largest financing programs targeting agribusinesses, the EU-sponsored IPARD program, lacks suitability for micro clients as they are frequently ineligible due to small arable land plots and insufficient operating revenues. Other available sources of finance, such as state-tailored programs and subsidies and international donor programs focused on equipment financing, fall short in addressing the financing needs of micro-producers as they are generally offered as one-time events to a limited number of beneficiaries. As such, many micro-producers and growers lack alternatives and must raise personal funds to invest in new equipment purchases. Faced with lack of opportunity, rural households are currently suffering from the highest levels of immigration – abandonment of farms is visible and apparent to all. In an effort to address this financing gap on the local market, the USAID Competitive Economy Project (Project) established a new model for creating an alternative financing mechanism at the municipality level specifically targeted at small, “unbankable” growers and producers. Pri- mary target groups of this financing model include small-scale fruit and vegetable producers.

In April 2020, the Project partnered with the Divac Foundation to develop the Revolving Fund (RF) model with local municipalities. This new, innovative financing scheme enables local municipalities to re-use funds raised from multiple stakeholders to benefit a broader group of local beneficiaries. Over time, initially raised funds are invested and re-used by other beneficiaries as the original disbursements are Fund representatives visit one of the beneficiaries, fruit grower Savo Čekeranac from Kriva Reka

Annual Report Y4 81 paid back into the fund. Through a competitive process, funds are awarded with streamlined rules and procedures, while financial terms are transparent and borrower friendly. This form of financing also complements other available financing programs, subsidies, and grants on the local market, and enables small famers and growers to tap into new financing opportunities to expand growth and production. The first pilot RF project was established in the Zlatibor district, with a joint 40,000 USD co- investment by the Divac Foundation and the Municipality of Čajetina, through a local municipal company Zlatiborski Eko agrar. This represented the first time in Serbia that a private foundation and a local municipality partnered in leveraging joint funds to create a long-term, sustainable financing mechanism targeting local agricultural development and food production. Through an open call, 19 local raspberry, honey, and cattle producers received financing in the amount of 2,000 USD for new investments in small machinery, hail-protection systems, and livestock registration. Selected participants pledged a personal bill of exchange to receive interest-free borrowing to be returned in quarterly installments over a three year period. The first round completed in October 2020. The Municipality of Čajetina also provided an additional subsidy of 30% ontop of the Revolving Fund’s total dispursed amount via its regular agricultural subsidy program, thereby successfully coupling new RF financing with an existing local agriculture support program. Importantly, by the end of 2020, when the first installment came due, all beneficiaries had timely fulfilled all payment obligations to the Revolving Fund.

One of the Revolving Fund’s beneficiaries, the Jovanović family from the village of Tripkova in Zlatibor, acquired a mill cutter and tractor sprinkler which significantly helped cultivate their 1-hectare blueberry farm. “With the new equipment we no longer have to manually finish that part of the job. Next, we plan to invest in a new drip irrigation system for the farm," says Stefan Jovanovic. The family is also engaged in rural tourism and rents out accommodation on their agricultural holding.

To further raise awareness among more municipalities across Serbia, the Project and Divac Foundation organized regional events and online webinars about the RF model's local-level benefits in the Fall of 2020. These events generated extensive positive media coverage in national-and local-level media outlets and online social media channels. As a result, 15 municipalities and three Regional Development Agencies expressed strong interest to implement similar financing mechanism in the near future.

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"In total, we’ve supported 19 local agricultural farms, which will return funds received over the next three years. The idea is that in three years, this project will be sustainable long-term, and we will move on to another municipality," explained Ana Košel, Director of the Divac Foun- dation.

Presenting the revolving fund model Next year, the RF will disburse new funds to selected beneficiaries once the first group of beneficiaries returns the originally dispursed amount. The RF fund remains open and can be supplemented with new captial from the local municipality, the Ministry of Agriculture, Divac Foundation, and other donor organizations. This enables partners and stakeholders to raise new funds from diverse sources to be deployed to local growers and producers on an on-going, year- round basis. Building on the initial success, the Project plans to replicate the Revolving Fund model in four new municipalities over the next year and a half. The expansion of the Revolving Fund model to new regions across the country will help contribute to long-term agricultural growth in local municipalities and surrounding regions. Going forward, more and more small-scale producers will have access to new capital and financing needed to scale their businesses, thereby helping secure sustainable livelihoods and local economic growth.

Annual Report Y4 83 Annex D: Self Assessment on Progress To be submitted in June 2021 per revised award fee schedule.

Annual Report Y4 84 Annex E – Annual Assessment Methodology Evaluation Purpose This annual evaluation, conducted by Center for Advanced Economic Studies (CEVES) on behalf of USAID/Serbia, assesses CSS’ performance in past year (Apr 2019 - Apr 2020) and measures progress against two key implications of CSS’ theory of change (ToC) – sustainability of interventions and replicability of initiatives. In addition, this evaluation identifies areas that may need greater attention to improve the project’s impact. The evaluation aims to: • Examine the performance of key project activities implemented to date • Examine the sustainability and replicability of key project activities implemented to date. • Determine whether the project has achieved planned results related to those ToC implications, both overall and by its functional competitiveness areas. • Provide brief recommendations on closing identified gaps in the project’s upcoming years. USAID/Serbia and Cardno Emerging Markets USA, Ltd., as the CSS implementing partner, are the report’s primary audience. Other interested parties include U.S. government institutions and other international donors working on competitiveness and related issues in Serbia. USAID anticipates using the evaluation findings to adjust CSS and inform future programming in the sector.

Evaluation Questions To guide fieldwork/interviews and reporting, the following six evaluation questions (EQs), together with accompanying sub-questions, are established: EQ1. To what extent has the project’s activity been designed and launched according to its marketability potential? > Who has proposed/defined an initial activity idea? > Have there been other attempts to develop and implement same or similar activity in the past? If yes, please elaborate what is different this time. > Are you aware of existence of a similar successful activity / story in Serbia? If yes, provide relevant examples. > Has that idea been supported by sound quantitative data and evidence-based calculations, such as cost/benefit analysis or feasibility study? If yes, is there a document? > Are you aware of existence of a similar successful activity / story in neighboring or com- parable countries? If yes, provide relevant examples.EQ2. To what extent have the project activities proved to be sustainable, even without CSS support (either know-how, logistical or financial)? > What are the expected/recognized risks, related to the successful launch and implementation of activity? EQ2. To what extent has the project activity proved to be long-term sustainable, even without CSS’ financial, logistical or know-how support? > Why was it needed to include CSS in development and implementation of the activity? > Which concrete gap in development or implementation of activity has CSS narrowed or closed? Was it one-off or systematic gap? If systematic, describe the capacity-building process performed by CSS.

Annual Report Y4 85 > Have some systematic changes occurred in organization's operations or market functioning, in order to avoid or close the gap in future? If yes, please describe the process. > Does CSS still support (financial, logistical, know-how, etc) an activity performed by partner? If yes, why? If no, has partner continued to perform the activity? > Please, describe the process of (planned) exit strategy. Is there a viable business plan and/or management capacity? > Has CSS/your organization introduced monitoring and evaluation tools, with clear quantitative or qualitative targets, in order to track the progress towards sustainability? EQ3. To what extent have the (pilot) activities/initiatives developed in cooperation with partners motivated similar behavior by other firms in sector? > Please, provide examples and outreach / dissemination channels. > Have CSS / partner had a proactive approach in informing other firms or organizations in sector (e.g. roadshows, workshops, newsletter, social media campaign) EQ4. Has the project implemented activities / demonstrated results that are replicable in other sectors? > Is performed activity firm-specific, sector-specific or has a general importance for Serbian economy / society? > Please list sectors in which performed activity / demonstrated result could have a specific impact (beside F&V) > Have there been expressions of interest (formal or informal) from firms from other sectors, regarding performed activity EQ5. Has the project implemented activities / demonstrated results that are or could be scaled up by its partners or even Government? EQ6. Has COVID-19 outbreak significantly impacted the implementation of this activity? > Please, elaborate COVID-19 impact on performance and sustainability of an activity. > If you expect that COVID-19 impact will be long-term/ not able to be mitigated soon, is there a possibility to adjust the activity? Please, describe. Listed EQs and sub-questions will serve as a basis for interviews with CSS staff. Building on those interviews and listed EQs above, tailor-made questionnaires will be designed, in order to interview various heterogenous project partners and produce answers related to issues of marketability, sustainability and replicability, respecting different nature and specifics of each of the partners and activities.

Evaluation Methods and Limitations The evaluation team implemented a rigorous approach based on collecting relevant qualitative and quantitative information through literature review and interviews with CSS staff and partners. The findings aim to establish the extent to which performed activities are marketable and sustainable, and whether the CSS model is replicable in other key sectors. Evaluation Methods The evaluation team used a variety of data collection strategies to gather the most relevant evidence in a timely and cost-efficient manner. Document and Materials Review These data sources included CSS’s Y3 Annual Report (April 2019 - April 2020), Y4 Working Plan (April 2020 - April 2021), Y4 Quarterly Reports (Q1, Q2, and Q3), Strategic Direction

Annual Report Y4 86 Summaries, and any other relevant and available secondary reports or analyses. The review of documents and materials has been critical to guiding the fieldwork. First, the team examined CSS’s underlying theory of change and its sustainability and replicability implications. Second, the team analyzed project documents to identify the components, tasks under components, task timing, and project partners. Finally, documents have been used to better-understand activities and to prepare interviews with CSS staff and partners. Survey Data Ipsos Strategic Marketing conducted a quantitative survey with representatives of business entities operating in fruit and vegetables (F&V) sector. The survey methodology was developed to ensure comparability with the results of the previous annual surveys. Basic information about the survey is provided below: > Target population: private firms operating in F&V sector in Serbia, i.e. producing, processing and/or selling raw and/or processed fruits and vegetables; > Data collection method: mixed-mode [CATI (Telephone) or CAWI (online) – whatever the potential respondents preferred]; CAPI (Face to face) mode, which was initially planned, in consultation with Cardno, was excluded due to Coronavirus disease outbreak. > Sample size: 296 business entities in total, wherein 195 project impacted entities, that participated in USAID program (treatment group), and 101 non-impacted entities which served as a control group; – Out of 296 entities, two are not engaged in production, processing or sale of fruit and vegetables or products containing fruit and vegetables. Consequently, they were not included in the basic data analysis provided within this report. > Selection of respondents: predominantly owners and senior managers of business entities, that is, persons who occupy the highest positions in the company, familiar with its operation. Based on the instrument from the previous annual surveys, USAID team developed the questionnaire, i.e. conducted necessary improvements and modifications in way that enables valid comparison with previous year’s results. The questionnaire was finalized jointly by Ipsos research team and USAID project staff. The main topics covered by the questionnaire include: production and export activities, finance issues (availability of various types of financing, fre- quency of using external sources of finance for investments etc.), market access and linkages and business networking. Additionally, questionnaire for business entities from treatment group contains section with impact questions (aimed to evaluate relevant USAID Project activities). The questionnaire also includes general information about the business entity.

CSS Staff Interviews The evaluation team conducted interviews with five member of CSS staff – Chief of Party, Technical Teams Coordinator, Access to Market Team Lead, Access to Finance Team Lead, and Workforce Team Lead.

Partner Selection and Interviews Although random selection of partners would be ideal, given that the number of partners in each group of sub-activities may be small, the team used a purposive informant selection process based on discussions with USAID/Serbia and CSS staff to provide the evaluation team with sufficient interviews to highlight any differences by stakeholder and activities type. The evaluation team interviewed 14 partners. The evaluation team made no site visits due to the coronavirus outbreak and required quarantine.

Annual Report Y4 87 Analysis Plan The evaluation team primarily used qualitative analysis to examine the evidence from the document review and interviews. The team has analyzed relevant implementer materials and secondary sources to develop preliminary findings, followed by a review of interviews data, syn- thesizing findings across all key informant types. Evaluation team has also thoroughly analyzed collected survey data, in order to evaluate Project’s key performance indicators. Finally, the team conducted an assessment of performance, marketability, sustainability and replicability of CSS activities, by key three functional areas and provided brief recommendations.

Evaluation Limitations Some limitations surround the study’s data collection and interpretation. ✓ Recall bias. Recall bias occurs when respondents incorrectly attribute impacts or changes to an activity as a result of the individual experiences of those being interviewed. They may attribute results incorrectly to CSS—for instance, conflating them with results from other interventions they experienced or simply not recalling the source of assistance that resulted in changes and improvements they might have experienced. The evaluation team aimed to minimize this bias by asking questions of each key informant in the same manner so as not to influence their responses. ✓ Response bias. Most respondents interviewed by the evaluation team have a vested interest in maintaining positive relationships with CSS and want to continue benefiting from funding or other relationship benefits. Response bias is the tendency to answer questions in an interview or on a survey in an untruthful or misleading manner, believ- ing that providing negative information will endanger their relationship with the project. The evaluation team mitigated this bias by opening every interview with the assur- ance to informants that their responses are collected only for analytical purposes, that any comments made would not be attributed to them unless they were in agreement, and that there would be no retaliation or direct consequences against them for their responses. In addition, evaluation team has prepared a set of sub-questions for each of the evaluation question, in order to contribute to more objective assessment. ✓ Partner selection bias. Selection bias can result when the implementing partner provides initial contacts for and access to partners who would most likely describe positive experiences with the project, thereby increasing the risk of gathering partial views of the project’s performance to date. The evaluation team minimized this bias by analyzing experience with each partner during the project cycle and by selecting them based on objective criteria, not implementing partner’s “wishlist”. The most effective approach to combating these limitations is to use multiple data sources to triangulate responses to each EQ. By combining information found in documents or interviews from multiple sources, the evaluation team ensured that any one piece of biased data would not skew the analysis.

Annual Report Y4 88 Annex F – Additional Communication Highlights

Annual Report Y4 89

Annual Report Y4 90

Annual Report Y4 91

Annual Report Y4 92 Attachment A: CSS Org. Chart USAID

Short -Term Technical Chief of Party Home Office Assistance Aleksandar Pavlovic

Deputy Chief of Party Partner Networking Coordinator Jasmina Debeljak Tatjana Milic Zanoskar Procurement Specialist Biljana Masic

Monitoring, Evaluation and Learning Manager

Alexander Swanwick ✓ Monitoring and Learning Specialist ✓ Duska Medic ✓ Operations and Finance Finance and Operations Specialist Manager: Nina Tasic ✓ Stevan Bulatovic ✓ ✓

PR and Communications Manager Mirjana Jevtic

Markets Unit Financial Investment Manager ✓ Miroslava Panic ✓ Team Leader: Zlatko Jovanovic ✓ ✓ Field Task Manager: Sasa Raskovic Workforce Development Team leader ✓ Svetlana Kijevcanin ✓ ✓

Annual Report Y4 93 Attachment B: CSS Grants and Subcontracts Update Grants and subcontracts have been an important tool for building key partnerships and networks, geared toward achieving its strategic objectives, throughout implementation of USAID CSS.

Award of grants To date, USAID CSS has awarded 33 grants to 28 organizations/companies for a total value of $998,400.54 (the total obligated amount includes grant modifications and cancella- tion). During Year 4, three grants were awarded in the total amount of USD $50,600.00 (one award under APS 2019-01 and 2 awards under RFA 2020-01). Annual Program Statement USAID CSS published the Annual Program Statement (APS) 2019, on October 25, 2019. Through the deadline for submission of applications on March 31, 2020, the project received six applications. The purpose of the APS was to solicit expressions of interest (EOIs) and applications from eligible organizations that present creative technical approaches and methodologies for supporting the Project’s key long-term goals. The Project supports initiatives in the following three priority areas: 1) Consolidation of the F&V processing sector; 2) Trade promotion – Improving trade and export service for industry firms; and 3) Services Innovation – New products, practices and/or partnership development. In the last quarter, one application submitted by Cooperative Union of Serbia was awarded (out of four awards in total). The purpose of this grant is to provide all-inclusive support to six selected members of the Cooperative Union of Serbia who either already produce or have the capacity to produce high value shelf ready products, prepared of ingredients of Serbian origin, to gain better access to domestic and international market. Request for Applications (RFA) USAID CSS published the Request for Applications USAID CSS/RFA-2020-01 “Implemen- tation of Smart Specialization Strategy in Food Industry in Serbia” on June 10, 2020, utilizing the remaining grant funds. After receiving only two applications, out of which none was approved, the USAID CSS decided to announce another round of RFA-2020-01 on August 12, 2020. The purpose of this RFA is to solicit applications to support the Project in achieving its program objectives, specifically, by piloting a model to integrate features of the Smart Special- ization Strategy Serbia (4S) in one out of four identified 4S priority areas - packaging industry. Moreover, the activity will also generate a spill-over effect to the food processing industry by better use of innovative, novel food and beverage packaging solutions (F&B). Two organizations were awarded a grant: Organika nova doo for “Small wool ECO-packaging for fresh food” project, and MTM Sirela doo for “Antimicrobial Active Packaging” project. All grantees have been regularly fulfilling the contracted obligations, and therefore 47 (forty- seven) payments were realized in the reporting period for accomplishment of milestones as per their grant agreements. Total disbursed grants funds through April 19, 2021 amounts to USD $991,707.26.

Annual Report Y4 94 Grants Close-out USAID CSS closed 30 grants since its inception, with a total value of $978,707.29. The Project maintains rigorous monitoring and evaluation of grantees’ performance to ensure grant recipients are fulfilling the terms of the agreement. If grantees are underperforming, the Project takes corrective action to ensure value for money and project objectives are being met. With one grant in the pipeline (final deliverable to be paid in May 2021), USAID CSS has committed $998,400.54 of total grant funds.

Status and award of subcontracts USAID CSS awarded 77 entities for the delivery of solicited services using various contracting vehicles (Subcontracts, Purchase Orders, Service Agreements and Small Value Purchase Or- ders). The total amount awarded is USD $,2,211,032.61 while the total disbursed subcontract funds until April 19, 2021amount to USD $2,074,414.33, as presented in the Table C1 below.

Table C1: Total Awarded and Disbursed Fund (April 19, 2021) Type of Contract Awarded amount -total Disbursed amount – total Subcontracts $1,446,588.00 $1,325,764.10 Purchase Orders $478,067.61 $468,651.69 Service Agreements $249,496.00 $249,496.01 Small Value Purchase Orders $36,881.00 $30,502.53 Total $2,211,032.61 $2,074,414.33

Annual Report Y4 95 Table C2: Ongoing Solicitations (April 19, 2021) USAID CSS Title Issuance Closing Status Expected number Solicitation date date of awardees /esti- No. mated amount RFQ-2021- Provision of Technical services to sup- March 23, April 6, Subcontract- One (1) award in the 04 port strategic communication efforts for 2021 2021 ing in pro- amount of $12,000 USAID Competitive Economy Project cess RFQ-2021- Enhancing Serbia’s Fresh Fruit Seg- April 14, April 28, in progress One (1) award up to 05 ment Online Marketing and Promotion 2021 2021 $10,000 Capacities through “Serbia Does Fruit” Platform. RFP-2021- Improvement of Fresh Fruit and Vegeta- March 8, April 7, Subcontract- Three (3) awards up 01 bles Value-Chains 2021 2021 ing in pro- to $120,000: through Integrative Business Models gress *RZ Plant; $29,839 (Hub&Spoke) *PDM Agro Fruit, $49,321 *Global Sistem Kooperativa, $39,727 RFP-2021- Professional Certification Courses for March 17, April 12, Subcontract- One (1) award; 02 the Agri-food Sector 2021 2021 ing in pro- Mokrogorska school gress of Management; $39,941.95 RFP-2021- Establishing Revolving Funds for Agro- March 22, April 13, Subcontract- One (1) award- Di- 03 business as an 2021 2021 ing in pro- vac Foundation; Alternative Financing Vehicle for Agro- gress $59,562.00 business

Annual Report Y4 96 Attachment B: Status of Grants and Subcontracts Grantee Title No. grant Amount USD Status ICT Hub d.o.o. Improving Serbia’s econ- Unsolicited proposal 7,087 Paid $7,000 and closed omy competitiveness USAID CSS/SS-2017- grant and innovation capacity 01 through multi stakeholder dialog and participation Youth Business Forum First working experience Unsolicited proposal 18,159 Paid $18,090.98 and for young graduates in USAID CSS/SS-2017- closed grant food industry 02 Chamber of Commerce Increasing export Sole Source 97,300 contracted 3/6 instalments paid and and Industry of Serbia through Creating a Value USAID CSS/SSS- 46,904.41 grant closed (PKS) Chains in Fruit and Veg- 2017-01 awarded etable Processing (with 50,395.59 de-obligated) IMPACT HUB Establishing Support USAID CSS/RFA- 33,328 Paid $33,327.89 and Hubs for Food Proces- 2017-01-1 closed grant sors Serbia Organika Establishing Support USAID CSS/SS-2018- 14,433 Paid $14,432.98 and Hubs for Food Proces- 01 closed grant sors Business Innovations Establishing Support USAID CSS/RFA- 33,379 Paid $33,378.97 and Programs Hubs for Food Proces- 2017-01-2 closed grant sors Nova Iskra Establishing Support USAID CSS/RFA- 33,478 Paid $33,438.97 and Hubs for Food Proces- 2017-01-3 closed grant sors DESING d.o.o. Establishing Support USAID CSS/RFA- 33,544 Paid $33,517.92 and Hubs for Food Proces- 2017-01-4 closed grant sors Chamber of Commerce Support and promotion USAID CSS/APS- 28,000 Paid $28,000.04 and and Industry of Serbia of Serbian agribusiness 2018-01-3 closed grant (PKS) companies at PLMA fair 2018 Van Drunen Farms Eu- Freeze-dried fruit/vege- USAID CSS/APS- 49,700 Paid $49,453.00 and rope table healthy snack 2018-01-2 closed grant Association for Promo- Belgrade Food Show USAID CSS/APS- 99,435 Paid $99,434.96 and tion of Serbian Food 2018 2018-01-1 closed grant Serbian Association of The best innovative food USAID CSS/APS- 12,729 Paid $12,611.00 and Food Technologists products-Student Com- 2018-01-4 closed grant petition Ecotrophelia Serbia 2018 Cold Storage Brestovik Quality improvement of USAID CSS/APS- 43,104 Paid $42,799.95 and Ltd. blueberry production ac- 2018-01-5 closed grant

cording to requirements of international buyers RZ Agro Integration of Central- USAID CSS/APS- 50,000 Paid $49,300.06 and Serbia Berry-fruits Grow- 2018-01-6 closed grant ers into RZ Agro Value Chain

Annual Report Y4 97 Grantee Title No. grant Amount USD Status Serbia Organica Strengthening position of USAID CSS/APS- 29,765,20 Paid $29,429.97 and Serbian organic products 2018-01-7 closed grant on foreign markets and development of business-oriented services Youth for Impact Internships for Productiv- USAID CSS/APS- 49,999.50 Paid $49,232.27 and ity and Competitiveness: 2018-01-8 closed grant Towards a Sustainable Model of Internships to Support Serbian Compa- nies from the Fruit and Vegetable Sector DM DM Incubator USAID CSS/APS- 50,000.00 con- Paid $48,567.95 and 2018-01-9 tracted, 48,568.00 closed grant awarded (with 1,432 de-obligated) Lukowa doo Lukowa Académie USAID CSS/APS- 17,284.00 Paid $17,284.03 and 2018-01-10 closed grant Sirogojno Co d.o.o. Si- Increasing export of fro- USAID CSS/APS- 49,980.00 Paid $$49,979.86 and rogojno zen and dried fruit from 2018-01-12 closed grant Serbia through raising quality and food safety within the supply chain Lukowa doo Education for Growers USAID CSS/APS- 11,680.43 Paid $11,680.34 and 2018-01-13 closed grant FORTIS d.o.o. Export-led growth USAID CSS/APS- 48,651.00 Paid $48,650.01 through organic standard 2018-01-15 certification and strengthening of Ser- bia`s organic fruit producers` competitiveness Business Association Building of Institutional USAID CSS/APS- 40,095.00 Paid $40,094.88 and of Apple Producers: and Marketing Support 2018-01-16 closed grant Serbia Does Apples Capacity for Serbian Ap- ple Exporters & Branding of Serbian Apple Indus- try ENECA Building Market Capaci- USAID CSS/APS- 33,000.00 Paid $32,999.97 and ties of Premium Food 2018-01-17 closed grant Processors from South Serbia through Private Labelling Serbian Association of The Best innovative food USAID CSS/SS-2019- 14,570.00 Paid $14,569.98 and Food Technologists products - student com- 01 closed grant petition Ecotrophelia Serbia 2019 Serbian Food Technol- From Some to Awe- USAID CSS/SS-2019- 25,230.00 Paid $25,229.93 and ogy Council some-Knowledge 02 closed grant Strengthening of food producers through IN SITU know-how transfer

Annual Report Y4 98 Grantee Title No. grant Amount USD Status Top Events Team International Conference USAID CSS/APS- 23,577.00 Paid $23,577.04 and Agro Belgrade – “Serbia 2019-01-1 closed grant Does Fruit Lukowa doo Lukowa Académie USAID CSS/APS- 17,000.00 Paid $16,999.99 and 2019-01-2 closed grant Cold Storage Associa- Strengthening of Man- USAID CSS/APS- 36,620.00 Paid $35,120.02 and de- tion of Serbia agement and Marketing 2019-01-3 obligated $1,500.00 Capacity as well as In- troducing a Modern Method of Harvesting Raspberries Cooperative Union of Development of market USAID CSS/APS 17,000.00 Paid 4 out of 5 delivera- Serbia chains in order to im- 2019-01-4 bles prove the work of agricultural cooperatives and subcontractors Organika Nova Small wool ECO-pack- USAID CSS/RFA 16,800.00 Paid $16,799.97 and aging for fresh food 2020-01-1 closed MTM Sirela Antimicrobial Active USAID CSS/RFA 16,800.00 Paid $16,799.96 and Packaging 2020-01-2 closed TOTAL contracted/modified 998,400.54

Subcontracts Subcontractor Title No. of subcon- Amount USD Status tract CEVES Baseline Assessment of Fruit and Purchase Order 19,926.00 Paid $19,926.00 and Vegetables Value Chains in Serbia 2017-01 closed Autentika Global d.o.o. Market Analysis for Top Serbian Ex- Subcontract # 25,994.00 Paid $25,519.04 and ported Fruits and Vegetables in Tar- 4736-001-Lo- closed geted Markets calFFP-01 BlueZeppelin d.o.o. Facilitation of Export of Serbian Niche SUBCONTRACT 28,340.00 Paid $43,339.98 and Products in Targeted Int’l Markets # 4736-001-Lo- 28,883.00 closed calFFP-02 (modified) 43,883.00 (modif.) Julka Toskic PR Facilitation of Export of Serbian Niche SUBCONTRACT 28,525.00 Paid $32,149.55 and agencija za marketing, Products in Targeted Int’l Markets # 4736-001-Lo- 32,225.00 closed projekte I konsalting calFFP-03 (modif.) AGROBRAND WM Equity Partners Financial Training to Serbian Small SUBCONTRACT 48,469.00 Paid $55,652.09 and and Medium Enterprises and Facilitat- # 4736-001Lo- 55,652.00 closed ing Access to Finance calFFP-04 (modified) Dotika Facilitation of Export of Serbian Niche USAID CSS- 50,000.00 Paid $49,999.88 and Products in Targeted Int’l Markets 2018-3/DOT-1 closed Dotika Facilitation of Export of Serbian Niche USAID CSS- 19,985.00 Paid $8,647.02; con- Products in Targeted Int’l Markets 2018-3/DOT-2 tract terminated.

Annual Report Y4 99 Subcontractor Title No. of subcon- Amount USD Status tract KoVoli.com.doo Facilitation of Export of Serbian Niche USAID CSS- 49,926.00 Pa id $49,925.95 and Products in Targeted Int’l Markets 2018-3/KOV closed Trofej doo Facilitation of Export of Serbian Niche USAID CSS- 46,309.00 Paid $46,309.05 and Products in Targeted Int’l Markets 2018-3/TRO closed AgroCommunications Facilitation of Export of Serbian Niche USAID CSS- 49,994.00 Paid $34,997.12 and Products in Targeted Int’l Markets 2018-3/AGC terminated AgroNet Certification Courses for Agrifood Subcontract 49,954.50 Paid $49,555.53 and Sector # 4736-001Lo- closed calFFP-05 Business Innovation Premium Food Design Hub-PFDH Subcontract 49,636.00 Paid $49,635.99 and Programs # 4736-001Lo- closed calFFP-06 Desing doo Premium Food Design Hub-PFDH Subcontract 40,534.00 Paid $40,534.09 and # 4736-001Lo- closed calFFP-07 SIM CERT doo Facilitating Access to Finance USAID CSS- 19,999.00 Paid $19,999.02 and 2019/3/SIM-1 closed SIM CERT doo Facilitating Access to Finance USAID CSS- 9,998.00 Paid 5 out of 5 deliv- 2019/3/SIM-2 erables ACDE Marko Mojsijev Facilitating Access to Finance USAID CSS- 19,876.00 Paid $19,275.99; to 2019/3/ACD-1 be closed BDO Advisory doo Facilitating Access to Finance USAID CSS- 19,897.00 Paid $14,591.32; ter- 2019/3/BDO-1 minated BDO Advisory doo Facilitating Access to Finance/Assis- USAID CSS- 16,945.00 Paid $16,944.98 and tance to Serbian companies’ partici- 2019/3/BDO-2 closed pation at the high-level international investment event Agriscape 2019- Fi- nancial Advisory and Promotional Ma- terial Design Association for Promo- Support to Competitiveness of Ser- Subcontract 99,800.00 Paid $99,799.88 and tion of Serbian Food bian Specialty Food Industry in Serbia # 4736-001Lo- closed calFFP-08 Miross Travel Agency Media Study Tour Organization Ser- USAID CSS- 20,000.00 Paid $18,397.87 and vices 2019-09/MIR (modified) closed (WO1 and 22,000.00 WO2), SA modified SEEDEV Competitiveness Strategy Study of Subcontract 39,778.00 Paid $40,178.06 and Serbian Fruit and Vegetables Sector #4736-001Lo- (Modified) closed calFFP-09 40,178.00 FRUTORGA Improvement of Fruit and Vegetables Subcontract 37,650.00 Paid $37,650.00 and Value-Chains # 4736-001Lo- closed through Integrative Business Models calFFP-14

AGROBEL "Improvement of Fruit and Vegetables Subcontract 48,874.00 Paid $48,874.03 and Value-Chains # 4736-001Lo- closed through Integrative Business Models " calFFP-10

Annual Report Y4 100 Subcontractor Title No. of subcon- Amount USD Status tract PUREBERRY "Improvement of Fruit and Vegetables Subcontract 47,793.00 Paid $47,793.01 and Value-Chains # 4736-001Lo- closed through Integrative Business Models " calFFP-12 DELTA AGRAR "Improvement of Fruit and Vegetables Subcontract 123,250.00 Paid $123,250.12 and Value-Chains # 4736-001Lo- closed through Integrative Business Models " calFFP-11 MENEX "Improvement of Fruit and Vegetables Subcontract 74,512.00 Paid $74,512.00 and Value-Chains # 4736-001Lo- closed through Integrative Business Models " calFFP-13 AgroNet Certification Courses for the agri-food Subcontract 49,804.00 Paid 7 out of 7 deliv- sector # 4736-001Lo- erable calFFP-15 ARDA Facilitation Access to Finance for Ser- USAID CSS 19,296.00 Paid $22,296.05; to bian Micro, Small and Medium Enter- 2019-10/ARD-1 (modified to be closed prises (MSME) Operating in Fruit and 22, 296.00) Vegetables Production and Pro- cessing Sector MS Consult Facilitation Access to Finance for Ser- USAID CSS 20,000.00 Paid $19,999.98; to bian Micro, Small and Medium Enter- 2019-10/MSC-1 be closed prises (MSME) Operating in Fruit and Vegetables Production and Pro- cessing Sector Valor Group Facilitation Access to Finance for Ser- USAID CSS 19,885.00 Paid $2,000.00; termi- bian Micro, Small and Medium Enter- 2019-10/VAL-1 nated prises (MSME) Operating in Fruit and Vegetables Production and Pro- cessing Sector MS Consult Facilitation Access to Finance for Ser- USAID CSS 8,000.00 Paid $7,999.99; to be bian Micro, Small and Medium Enter- 2019-10/MSC-2 closed prises (MSME) Operating in Fruit and Vegetables Production and Pro- cessing Sector Foundation Ana and Establishing Pilot Revolving Fund for Subcontract 19,998.00 Paid $19,997.97 and Vlade Divac Agrobusiness as an Alternative Fi- # 4736-001Lo- closed nancing Vehicle for Agrobusiness calFFP-17 Desing d.o.o. Creation of Products Based on Genu- Subcontract 114,128.50 Paid $103,128.50 and ine Serbian Fruit and Vegetable Vari- # 4736-001Lo- Modified closed eties and their Marketing and Promo- calFFP-16 $ 103,128.50 tion in International Markets Valor Group doo Study of Serbian market environment Subcontract 19,600.00 Paid 19,599.98 and for establishing Alternative Investment # 4736-001Lo- closed Fund for Agrobusiness calFFP-18 Simcert Facilitating Access to Finance USAID CSS- 19,790.00 0/8 deliverables 2019/3/SIM-3 ARDA Facilitation Access to Finance for Ser- USAID CSS 19,296.00 0/8 deliverables bian Micro, Small and Medium Enter- 2019-10/ARD-2 prises (MSME) Operating in Fruit and Vegetables Production and Pro- cessing Sector

Annual Report Y4 101 Subcontractor Title No. of subcon- Amount USD Status tract MS Consult Facilitation Access to Finance for Ser- USAID CSS 20,000.00 0/9 deliverables bian Micro, Small and Medium Enter- 2019-10/MSC-3 prises (MSME) Operating in Fruit and Vegetables Production and Pro- cessing Sector DME International Professional videography and photog- 001/2018 3,179.15 Paid $3,179.15 raphy services for the Premium Food Design Hub Tasty Talks event on Dec 6, 2018 at Dorcol Platz, Belgrade Cube Team 1. Annual subscription fee (access to 002/2019 3,190.00 Paid $3,190.01 database, 50 licenses guidelines and training of selected users; on-line support within the license term) Mar, 2019-Mar,2020 2. Custom-based application, API-access/subscription for up to 350 companies (selected by CSS project) for 2019 Cubes d.o.o. Development of the Website of the 003/2019 3,800.00 Paid 3,800.00 National Association of Serbian Prunes Producers, including draft and final version of the web site; hosting; beneficiary training and maintenance /content update Cubes d.o.o. Development of the web site for the 004/2019 4,000.00 Paid $4,000.02 first Serbian Union Cooperative Digital Drive Proof reading and translation 005/2019 5,000.00 Paid eight invoices Darko Jaksic PR Wine Provision of Services for the Prepara- 006/2019 4,900.00 Paid $4,899.98 Research tion of the Initial Analysis Study of the Wine Sector in Serbia AGROBRAND Julka Capacity Building of Serbian Fresh 009/2020 5,000.00 Paid $4,999.99 Toskic PR F&V Firms and International Market- ing, Branding and Promotion of Ser- bian Fresh Fruit Industry Cube Team 1. Annual subscription fee (access to 008/2020 3,190.00 Paid $3,189.98 database, 50 licenses guidelines and training of selected users; online support within the license term) Mar,2020-Mar,2021/// 2. Custom- based application, API-access/subscription for up to 350 companies (selected by CSS project) for 2020 Sasa Jelic PR Innovate ICT Specialist 010/2021 2,000.00 Paid $2,000.00 Solutions Vinska kultura Wine e-commerce 011/2021 2,700.00 0/2 deliverables Info Point Annual Subscription Fee, database 013/2021 411.00 1/1 paid checkpoint.rs Cube Team Annual Subscription Fee, database 012/2021 2,690.00 0/1 deliverable

Annual Report Y4 102 Subcontractor Title No. of subcon- Amount USD Status tract KVALITET PLUS 1206 Provision of technical and operational SERBIA CSS 18,080.00 Paid $18,080.00 Katarina Jelisavcic assistance in facilitation of gathering 009/2018 PR export-ready soft fruit producers Aleksandar Jovanovic - Provision of technical assistance in SERBIA CSS 18,970.00 Paid $31,230.00 Autentika Global facilitating USAID Competitive Econ- 010/2018 31,230.00 omy Project key initiatives with Indus- modified try Associations ($35,905.00) Misa Stojanovic PR Provision of technical assistance in SERBIA CSS 15,000.00 Paid $15,001.00 Digital Drive Beograd facilitating Serbian premium food pro- 011/2018 ducers to apply for International Taste and Quality Institution’s (iTQi) Supe- rior Taste Award in 2019 Team 3 Plus Solutions Provision of logistics and operational SERBIA CSS 29,050.00 Paid $29,050.00 - Marko Djordjevic PR assistance in export of fresh produce 012/2018 to European market MCG Sasho and Oth- Provision of Services for Capacity SERBIA CSS 14,800.00 HO Contracting and ers - Company for con- Building of the Association for the 013/2018 payed sulting business activi- Promotion of Serbian Food (APSF) ties (Sasho Ristevski) KVALITET PLUS 1206 Implementation of quality standards to SERBIA CSS 18,980.00 Paid $18,980.00 Katarina Jelisavcic PR ensure export of fresh produce to Eu- 014/2019 ropean market Misa Stojanovic PR Provision of Services for Organizing SERBIA CSS 7,550.00 Paid $7,550 and Digital Drive Beograd an International Taste Institute Pro- 015/2019 closed gram for a High-Profile Public Event - Belgrade Food Show 2019 Bloom Consulting - Nation Branding and Digital Reputa- HOME OFFICE 7,200.00 HO Contracting and Jose Filipe Torres tion of Serbia #4736-2019-03 payed

Jovan Radomir AB Jo- How to Succeed in a Specific EU HOME OFFICE 2,750.00 HO Contracting and van Radomir Market (one case study) with a Prod- #4736-2019-01 payed uct from Serbia? The Value of Story- telling. Foodist GmbH- Alexan- E-commerce - Concepts, Challenges, HOME OFFICE 2,656.00 HO Contracting and der Djordevic Opportunities and Market Potential for #4736-2019-02 payed Food Manufacturers for Online Pre- mium Food Sales Autentika, Aleksandar Integration with the International Mar- SERBIA CSS 29,000.00 Paid $29,000.00 Jovanovic kets in Fresh, Frozen and Dried Fruits 16/2020 Sectors WM Equity Partners Provision of Professional Financial Purchase Order 17,360.00 Paid $17,360.00 Advisory and Promotional Material 2018-04 Design Services SEEDEV D.O.O. Provision of Services of market re- Purchase Order 9,500.00 Paid $9,500.00 search and analysis for the high-pro- 2018-08 file public event UC Davis Providing support to AgroNet Centre HOME OFFICE 71,691.00 HO Contracting and for Education and Research in Crea- PO 2019-13 _ paying tion of Certification Courses for the

Annual Report Y4 103 Subcontractor Title No. of subcon- Amount USD Status tract Agri-Food Sector in Serbia (71,691 4736-001 USAID USD) CSS Pediment d.o.o. Provision of services aimed at en- Purchase Order 24,000.00 Paid $23,999.97 hancing Industry Consolidation and 2019-014 _ Competitiveness by increasing num- 4736-001 USAID ber of enterprises able to provide sup- CSS port to farmers while responding to high-market demand for certain products SGS Beograd d.o.o. Capacity Building of Extension Ser- Purchase Order 6,400.00 Paid $6,400.01 vices of Ministry of Agriculture (MoA) 2019-015 _ to Assist Agriculture Producers on Im- 4736-001 USAID plementation of Standards Required CSS to Enter Value Chains Ipsos Strategic Market- Annual Assessment of Fruit and Veg- Purchase Order 22,220.00 Paid $22,219.99 ing etables Value Chains in Serbia 2019-016 _ 4736-001 USAID CSS TMT Mirela Scarlat RU Provision of market analysis and or- Purchase Order 23,200.00 HO Contracting and ganization of trade mission, B2B 2019-017 _ Paid event, to assist Serbian association of 4736-001 USAID apple producers to enter the Roma- CSS nian market Mia Popic PR consult- Provision of Assistance to Develop Purchase Order 7,950.00 Paid $7,950.01 ing KC Sinergija Beo- and Improve Frozen F&V Supply 2019-018 _ grad Value Chain and South Serbia 4736-001 USAID CSS Webtise doo Production of promotional videos and Purchase Order 6,100.00 Paid $6,100.02 photo testimonials to support entre- 2019-019 _ preneurship in the food industry 4736-001 USAID CSS SeVeN Financing and growing your business! Purchase Order 19,200.00 Contract expired and 2019-020 _ paid $17,280.02 4736-001 USAID CSS SEEDEV Provision of Services for the Analysis Purchase Order 9,950.00 Paid $9,949.98 and of the 10 (Ten) Most Important Agri- 2019-023 _ closed cultural Products in Serbia 4736-001 USAID CSS Ipsos Strategic Market- Annual Assessment of Fruits and veg- Purchase Order 24,599.00 Paid $24,599.06 and ing etables Value Chains in Serbia -2020 2020-024 _ closed 4736-001 USAID CSS Darko Jaksic PR Wine Preparation of the Baseline and Ac- Purchase Order 8,950.00 Paid $8,950.02 and Research tion Plan based on the Analysis Study 2020-025 _ closed of the Wine Sector in Serbia 4736-001 USAID CSS Globally Cool B.V. Market Strategy for Serbian Export- HOME OFFICE 24,900 4/4 milestone paid by Oriented Products in Heat Processed PO 2020-026 _ HO F&V Industry 4736-001 USAID

CSS

Annual Report Y4 104 Subcontractor Title No. of subcon- Amount USD Status tract Vinska kultura doo Provision of Services for the Organi- PO 2020-027 _ 23,730 Paid 23,730.00, zation of high- profile promotional 4736-001 USAID closed Event “Prokupac Day” in Serbia CSS Top Events Team Improving trade and export services PO 2020-028_ 19,970 Paid $15,844.01; to for F&V industry firms through educa- 4736-001 USAID Modified be closed tion, trade shows and B2B organiza- CSS $15,844 tion Ipsos Strategic Market- Annual Assessment of Fruits and veg- Purchase Order 24,985.00 2/4 milestones paid ing etables Value Chains in Serbia -2020 2020-029 _ 4736-001 USAID CSS

Total $2,211,032.61

Annual Report Y4 105 Attachment C: Press Clipping

Press Clipping for Y4 has 376 articles. The list begins on the next page.

Annual Report Y4 106