Usaid Serbia Competitiveness Systems Strengthening Activity Quarterly Report #11, Y3 Q3 October– December 2019

USAID SERBIA COMPETITIVENESS SYSTEMS STRENGTHENING ACTIVITY QUARTERLY REPORT #11, Y3 Q3 OCTOBER– DECEMBER 2019

January 30, 2020 This report is made possible by the support of the American People through the United States Agency for Interna- tional Development (USAID). The contents of this report are the sole responsibility of Cardno Emerging Markets USA, Ltd. and do not necessarily reflect the views of USAID or the United States Government.

USAID SERBIA COMPETITIVENESS SYSTEMS STRENGTHENING ACTIVITY QUARTERLY REPORT #11, YEAR 3, QUARTER 3 OCTOBER-DECEMBER 2019

Submitted by: Cardno Emerging Markets USA, Ltd.

Submitted to: USAID

Contract No.: AID-169-C-17-00003 Serbia Competitiveness Systems Strengthening (CSS) 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 ...... II INTRODUCTION ...... 1 EXECUTIVE SUMMARY ...... 2 REVIEW OF PROJECT PROGRESS ...... 3 TECHNICAL ACTIVITIES...... 3 WORKFORCE DEVELOPMENT ...... 15 ACCESS TO FINANCE...... 18 STRATEGIC COMMUNICATIONS ...... 23 ACTIVITIES PLANNED FOR NEXT QUARTER ...... 26 ACCESS TO MARKETS ...... 26 ACCESS TO FINANCE...... 27 WORKFORCE DEVELOPMENT...... 27 STRATEGIC COMMUNICATIONS ...... 28 ANNEX A: PMP TABLE ...... 29 ANNEX B: PROGRESS AGAINST YEAR 3 WORKPLAN ...... 31 ANNEX C: CSS GRANTS AND SUBCONTRACTS ...... 38 ANNEX D: QUARTERLY SELF-ASSESSMENT ON PROGRESS ...... 42 ATTACHMENT 1: CSS ORG. CHART ...... 46 ATTACHMENT 2: STATUS OF GRANTS AND SUBCONTRACTS ...... 47 ATTACHMENT 3: PRESS CLIPPING LIST ...... 53

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Acronyms APSF Association for the Promotion of Serbian Food AMELP Activity Monitoring, Evaluation and Learning Plan B2B Business-to-Business BFS Belgrade Food Show BSO Business Support Organization CEFTA Central European Free Trade Agreement CLA Collaboration, Learning, and Adaptation CSS Competitiveness Systems Strengthening DCA USAID’s Development Credit Authority EU PRO European Support to Municipal Development Programme EBRD European Bank for Reconstruction and Development FDI Foreign Direct Investment FoA Faculty of Agriculture, University of Belgrade FON Faculty of Organizational Sciences, University of Belgrade FSA Framework Service Agreements F&V Fruits and Vegetables HoReCa Hotel/Restaurant/Café ILC Industry Leader Company IPARD Instrument for Pre-Accession Assistance in Rural Development MoA Ministry of Agriculture, Forestry and Water Management MoE Ministry of Economy NBS National Bank of Serbia NAPP National Association of Serbian Prune Producers PFDH Premium Food Design Hub PKS Chamber of Commerce and Industry (“Privredna komora Srbije”) RAS Serbian Development Agency RF Results Framework SDA Serbia Does Apples Association SFTC Serbian Food Technology Council SME Small and Medium Enterprise STA Superior Taste Award TOS National Tourism Organization of Serbia VC Value Chain VCAP Value Chain Action Plan VCRA Value Chain Readiness Assessment YFI Association Youth for Impact

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Introduction Building on previous investments, successes, and lessons learned from USAID and other donor initiatives in Serbia, USAID’s Competitiveness Systems Strengthening Activity (Project/CSS) is a four- year activity initiated in April 2017. The Project aims to strengthen Serbia’s agriculture processing sector (the sector) by focusing on the growth of sales as the key benchmark for evaluating performance. CSS approach takes a market system perspective 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 only being tested on a narrow set of value chains (VCs), fruits and vegetables (F&V), within the sector –, it should create a “ripple effect” into others, creating momentum for strengthening Serbia’s overall competitiveness. For this reason, the Project approach to implementation is organized functionally—rather than being tied to a specific product or VC, it instead targets products and VCs with the highest competitiveness potential for Serbia. The Project targets functional competitiveness areas in different capacities:

Table 1: CSS Functional Competitiveness Areas Competitiveness Area Acronym Description Access to markets A2M Increasing the confidence of Serbian enterprises to identify markets to increase connections to local, regional, and international buyers. Firms’ Operations improvement include providing support for improvements in enterprise management, product design and development, product quality. Access to finance A2F Stimulating demand for growth finance and making finance accessible and borrower-friendly. Workforce development WFD Improving the pipeline of qualified workers to companies needing them.

The business environment is being addressed by identifying important issues within the policy and regulatory environment and working actively with government partners, USAID’s Cooperation for Growth project (CFG) and EU programs. To mitigate risk, monitor the progress of activities, and adjust in implementation as needed, CSS uses Collaborating, Learning and Adapting (CLA) as a fundamental implementation principle. The primary goal of CLA is to ensure that the desired objective and purpose of the Project remains the same, even if while changes in program activities lead to modifications in expected outputs.

Figure 1. CSS Theory of Change

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Executive summary During the third quarter of Year 3, CSS activities made significant progress, particularly in fresh produce marketing which is increasingly becoming a high-value industry segment with strong competitiveness potential. As expected, the largest EU buyers sourced from Serbia this season, which should lead to further development of professional export firms. The Belgrade Food Show 2019 showed impressive results, and CSS continued with preparations for the first AgroBelgrade show and Fruit Logistica in Berlin. The Serbian business association “Serbia Does Apples” (SDA) successfully concluded the first year of its formal existence. SDA helped its members to diversify export markets and became a member of the world’s leading organizations (WAPA and Freshfel). Serbian associations and traders, successfully participated in Fruitnet Fresh South-East Europe Forum (Belgrade) and Fruit Attraction Trade Fair (Spain) representing the Serbian fresh F&V industry. By the end of 2019, CSS formalized agreements with 5 Serbian companies to implement integrative business models for small F&V growers to enter value chains and export to the EU. Specialty food activities continue to show remarkable results and are now looking to establish sustainable models to continue supporting the Serbian F&V processing industry. Pilots in the frozen segment continue to demonstrate the need to expand to the organic segment. A proposal from the Union of Cold Storage has also been received for a possible partnership where many of the project efforts could be potentially adopted on a wider scale. Access to finance activities have started to show traction on the ground. Four technical trainings on finance options and strategic plans have been delivered for 40 firms. Simultaneously, the DCA process entered the final phase and the project is now providing TA support to potential loan recipients. Finally, equity markets have started recognizing the potential of the food processing sector with the biggest Serbian and regional investors lining up for the ‘shark-tank’ session at this year’s BFS. CSS assisted the MoA and RAS to participate in Agriscape 2019 (Abu Dhabi), an international investment event dedicated to global agricultural assets available to foreign investments and promote Serbian agribusiness potentials. Workforce development efforts are starting to increasingly integrate other project activities. In this quarter, the teams from FoA and UC Davis wrapped up the industry course design. Together with PKS, the course will be promoted in three cities. Simultaneously, Lukowa, a partner on developing private sector lead educational options with Belgrade University has presented an idea to develop a full- fledged business academy for the food processing industry, based on the successful results from the last year’s pilot. CSS efforts are progressing, with functional industry networks starting to form and support successful activities. We are seeing more overlap between project partners, and partnerships emerging outside of project influence. This process is starting to produce results reflected in exports of the highest value segments of the Serbian industry to the EU. As expected in the agribusiness sector, results take time to fully realize, and decisions in the industry are made based on seasonal factors and market trends that frequently span 5-10 year periods. It takes time to develop collaborative relationships, especially when they are being developed in upper echelons of the industry, the high-value segment, a process that is just starting in Serbia.

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Review of Project Progress Interventions in Year 3 were geared towards scaling up successful pilots, finishing and evaluating the ongoing ones, and monitoring crowding-in of market stakeholders around successful project interventions.

Technical Activities Access to Markets

1. Fresh F&V Sector Through the CSS market strategy, the EU markets were identified as the most promising new international markets for high-value fresh fruits, followed by CEFTA and Middle East markets. The most prominent Serbian apple producers initiated establishment of a professional business association and launched a series of actions to promote their products in the EU and internationally. The fresh berry sector is highly profitable and expensive to develop, and it is just starting to grow. The recent boom of blueberry production and other berries is providing an opportunity for Serbia to show up on EU market with its own source and origin label and start competing in the most profitable and fast-growing segment of the industry. The Project focus in this process is the integration of reliable buyers/distributors, from the EU and supporting the development of firms that can be an example to the rest of the industry. The buyers of this profile are the key, since they can open trade channels for a range of fresh products. The Serbian vegetables segment deserves Project’s strong support and attention. Most competitive vegetable crops, such as peppers, cucumbers, gherkins, tomatoes and root crops such as carrots are widely grown in Serbia mostly by small-scale farmers. A highly skilled and competitive workforce, along with proximity to EU markets, offers a unique advantage for Serbian producers, cooperatives and business organizers. The challenge would be to consolidate and standardize the production to access international buyers. In order to address the challenges of globalized fresh F&V markets, the Project supports existing and new entrepreneurs capable to organize their value chains into a hub & spoke, i.e. contract farming models. Based on the analysis of the fresh F&V sector, primarily in south and central Serbia, CSS identified several industry lead companies as possible exporters and integrators for a larger number of small-scale farmers. From October to December 2019 CSS conducted a tendering process with these companies and selected 5 industry lead companies from this sector.

Industry Associations Support to industry associations remains one of the key components of the Projects’ strategic interventions for improving competitiveness and increasing exports. Two associations, representing fresh apple and prune industries, have so far shown promise for effective functioning and sustainability. Capacity building – Serbia Does Apples Association (SDA): SDA conducted a series of activities to promote the association and its members. Ms. Julka Toskic, manager of the association, gave an interview in a specialized fresh fruit & vegetables magazine “Froutonea”1. As a result of joint attendance at the London Produce Show (June 2018 and June 2019) and follow-up marketing and promotional of SDA, apple export from Serbia to the UK continues to grow: - During the season 2018/2019 members of SDA exported 2,300 tons of apples to the UK, valued of 1.4 million euros ($1.55 million).

1 “Froutonea”, January 2020 issue, pages 22-23: http://online.anyflip.com/sgqmt/wlxa/mobile/index.html

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- According to official statistics, from August to December 2019, Serbia exported 2,500 tons of fresh apples to the UK, valued 1.35 million euros. Most of this export is to contribute to the companies – members of the SDA association. This is approximately just a half of exporting season, so the quantity and value should be doubled. As a fresh member of the World Apple and Pear Association (WAPA), SDA attended the annual “Prognosfruit” conference in Belgium in August 2019. “Prognosfruit” is a unique, global networking platform for decision-makers in fresh apple and pear business. It was announced that the next “Prog- nosfruit” conference will be held for the first time in Serbia (Novi Sad) in August 2020, which is a great achievement for SDA. After a successful trade mission in Bucharest in August 2019, the lead Romanian fresh F&V importer and distributer “Romfruit” visited Serbia and had B2B meetings with several members of SDA. “Rom- fruit” came to an agreement to start importing apples from two SDA members: “Pollino Agrar” and “Ciric Agro MDjZ”. Three SDA member companies (“Atos fructum”, “PIK Južni Banat” and “Apple World”) participated in Asia Fruit Logistica trade show in Hong Kong (September 2019) and made valuable contacts with potential buyers from the Middle East (UAE, Qatar and Saudi Arabia)2. UAE, Qatar and Saudi Ara- bia)3. These Serbian companies started exporting to the Middle East immediately after the trade show and the first results will be presented in the CSS annual report. In the upcoming period, SDA will continue working on joint actions and exhibitions to open new markets. SDA will continue marketing activities in most relevant international medial platforms, “Fresh Plaza” and “FruitNet”. “Agrobrand”, a consulting agency which has been providing management and marketing services to SDA, is planning to include leading Serbian fresh berry and stone fruits producers under the common, umbrella brand “Serbia Does Fruits”, transfer positive experiences from SDA and provide a similar set of services to this group of companies. Capacity building – National Association of Serbian Prune Producers (NAPP): The Project has been supporting NAPP members by increasing their visibility through modernizing and updating the association’s website, improving export capacities and increasing sales to the EU. In July 2019 two international companies, Derby Ingredients and Whitworts, visited six Serbian companies: Agranela, Podgorina voće, Jovanović voće, Promo Pen, Tehno Božići and Monicom. Following up the visit Derby Ingredients, European wholesaler and distributor, included Serbian prunes into their portfolio and the first orders are expected in 2020. Derby Ingredients asked for a dried blueberries sourcing company and the first samples were shipped to Poland. Serbian prunes and dried blueberries have been introduced to several international buyers in Europe as a result of the June field visit and B2B meetings facilitated by the Project.. Derby Ingredients actively took on promoting Serbian prunes and dried blueberries by sharing several product samples and presented them to the buyers. Serbian prunes are very competitive, having low sugar and high fiber content. ILC partners in functional networks include key market actors who work on extension programs for farmers and financial institutions that provide packages for supply chain financing. In order to remain competitive, RZ Agro has started cooperation with Emco Cal which creates competitive strawberry, blackberry, raspberry, blueberry, and citrus varieties. This is a part of a broader effort to bring American know-how to Serbia, to elevate production technology and competitiveness of small growers to a higher level. RZ Agro successfully completed activities linked with integration of small-holder farms primarily producing gherkins. During 2019 RZ Agro integrated over 250 farmers

2 e.g. “NRTC Dubai International Vegetable & Fruit Trading LLC”, “Farzana Trading LLC” - Dubai, “AAK Middle East W.L.L.” - Qatar, “Azem Al Enjaz Trading” and “Roon Al Fawelen” both form Saudi Arabia, “Bakarat Vegetables & Fruits CO LLC” from Dubai and others. 3 e.g. “NRTC Dubai International Vegetable & Fruit Trading LLC”, “Farzana Trading LLC” - Dubai, “AAK Middle East W.L.L.” - Qatar, “Azem Al Enjaz Trading” and “Roon Al Fawelen” both form Saudi Arabia, “Bakarat Vegetables & Fruits CO LLC” from Dubai and others.

Quarterly Report #11: Year 3, Quarter 3 Page 4 into their value chain, providing full-scale support to them: inputs, advisory, insurance, logistics, and transparent prices as a part of contracted production. In 2020 RZ Agro is planning to expand their value chain and include other F&V with high export potentials, such as red peppers, strawberries and other berry fruits. CSS will continue to monitor the activities of RZ Agro and consider expanding the support for this kind of integrative agribusiness system. The successful pilot with Brestovik in 2018 established a positive reputation for Serbian F&V producers, enabling others to start building long term relationships with EU buyers during 2019. Since the Serbian producers fulfilled the EU requirements and successfully met the buyer’s demands, they also expanded to exporting other products such as stone fruits and peppers. CSS has been working with berry fruit producers to raise the capacity to handle fresh supply chain logistics and integrate them for export to the EU. As a leader in the distribution, Greenyard is looking for new markets, through diversifying imported fresh produce origin countries. It is interested in sourcing blueberries, selected stone fruit and pepper products from Serbia. Recognizing the strong potential of the fresh berry market and increasing demand for fresh produce by EU consumers, the Project helped Serbian companies negotiate and close the sales contracts for certified retail-ready blueberries with Greenyard. Food Safety and Quality Standards. After a year of supporting companies in the implementation of food safety and quality standards, CSS helped PureBerry and Brestovik implement FSSC 22000, BSCI and Global GAP 2 standards. Agro Bel will soon be able to implement the FSSC 22000 and BSCI standards: > Brestovik: 48 blueberry cooperants certified in GlobalGap standards, and a plum, apricot, peach, and 3 cherry cooperants implemented FSSC 22000 and BSCI standards > Pureberry: 32 cooperants, (19 blueberry, 5 apricot, 2 pepper, 1 nectarine, 1 peach, and 4 plum producers) implemented GlobalGap, FSSC 22000 and BSCI standards. New export contracts. Seven contracts were fully executed between fresh producer companies and EU buyers/distributors. In total, these contracts facilitated the export of 190 tons of fresh blueberries, 217 tons of plums, over 20 tons of apricots, and over 4 tons of peppers to the EU. Export quantities by producer organization are detailed in Table 2.

Table 2: ILC new export contracts Brestovik Blueberries: As a result of the pilot (2018), 42 tons were exported to Bakker (Netherlands). In 2019, they exported approx. 690 tons of retail-ready 150g, 300g and 500g packs of certified, Serbian blueberries to buyer/distributors Bakker (Netherlands) and 4.2 tons to Anevo (Germany). Plums: Exported 50.5 tons of plums to Bakker (Czech Republic), 54.8 tons to Greenyard Fresh Germany (Ham- burg). 55.3 tons to Greenyard Fresh Germany (Etting); 49.5 tons to Jewels (France); 6.1 tons to Romfruit (Roma- nia); and 1.1 tons to Anevo (Germany). Apricots: 10.3 tons of apricots to Anevo Germany; 13.6 to Romfruit (Romania). Pureberry Blueberries: Exported over 120 tons of blueberries to Bakker (Netherlands). Peppers (red kapya): Exported 4.48 tons of peppers (red kapya), from a field trial (1ha) to Greenyard (Germany). Pureberry invested in the production of red kapya peppers based on Greenyard’s strategic shift to find new sourcing countries for specific high demand products.

New investments in production capabilities. To meet EU market requirements and increase production capabilities, Serbian export companies invested approximately $500,000 in implementing food safety standards, enhancing production facilities, and acquiring modern packaging machines. Other fresh produce. In line with supporting the berry sector in Serbia, the Project is supporting raspberry producers in introducing state-of-the-art growing systems. With raspberries being most delicate berries, which require careful treatment in production, handling and placement, the introduction of these systems is a must-have in ensuring sales with the EU retailers. This improves the reliability of Serbian producers to export fresh raspberries and place them in the largest retail chains in Europe.

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B2B meetings. Project coordinated and facilitated on-site field visits and meetings between AgroBel, and its value chain partners/cooperants, with Fruit World, a distribution subsidiary of the Best Fresh Group, a leading company in the Netherlands. Fruit World recognized the potential of sourcing blueberries from Serbia and is prepared to help partner companies to introduce new varieties of blueberries, as well as other berry fruits. Project’s partners in the berry subsector had been invited to take part in Dutch buyers and distributors four-day trade mission to Serbia, organized by the Embassy of the Netherlands in Belgrade. Ten Dutch buyers and distributors took part at the Soft Fruit Trade Mission in November aimed at introducing Serbian soft fruit sector production and export potentials. The companies include Delhaize Serbia, Rappo, Evers International, Fall Creek, Genson Quality Plants, Koppert, E. Hendrix, Legro, Nedser BV, and South Hansa. The following Serbian companies were visited: Union of Cooperatives “Naši Voćari” (Arilje) and AgroBel (Kosmaj) – both project partners, as well as Laki (Arilje), Intersad (Ru- menka), and family farms Jevtić, Popić, Radovanović, all from the Šabac region. The Dutch government will be launching the Partners for International Business (PIB) Project for knowledge exchange and networking, and two Project partner companies have already been selected as eligible candidates for cooperation (the installment of testing plots) - AgroBel and cooperative “Naši Voćari”. FruitNet Forum South East Europe. Fruitnet Media International, the world’s leading publisher and event organizer for the international fresh F&V industry, organized Fruitnet Forum South-East Europe (FFSEE) 2019 at the Hyatt Hotel in Belgrade in November. The event brought together major international buyers and leading export-oriented producers to explore and discover new commercial opportunities in the fresh produce market in the SEE region. FFSEE provides a valuable platform for the region’s F&V suppliers to learn from industry experts how to develop, diversify and increase exports in high-value international markets. Following the successful participation at last year's event, several Project partner organizations were among the many sponsors of this year’s event, including: “Ćirić Agro MDjZ”, “Borovnica Koopera- tiva”, “Hladnjače Brestovik” and “AgroBrand,” all SDA member-companies. The event was also attended by leading private-sector companies and government organizations, including Apple World, Delta Agrar, Dotika, Borovnica Klub, AgroBel System, Haygrove, MoA and PKS. A new, market-oriented concept proposed by the Project at the event - FruitNet’s B2B Café – provided an exclusive opportunity for local companies to hold business networking meetings with potential buyers. FruitNet’s team brought four major global buyers including Tesco Central Europe, Carrefour Middle East UAE, IPL UK (ASDA-Walmart) and IG International India. Other prominent European distributors, including Jupiter Group UK, Special Fruit Belgium, MDA Ag Products Turkey, also attended the event. The high-profile and interest in the event continues to serve as an effective platform to promote Ser- bia’s fresh produce industry. Through key partnerships with Serbia Does Apples Association and Fruit- Net UK, the Project continues to promote the “Serbia Does Fruit” brand to raise the international profile of Serbia’s fresh fruit and vegetable producers and increase sales and exports of Serbian products in new foreign markets. The Project will continue to support strategic initiatives to facilitate trade and export opportunities for F&V producers in the fresh produce sector. CSS has been providing support to “Naši Voćari”, the first Serbian union of cooperatives (complex cooperative), in increasing their visibility. This included assistance in the branding, design of logo, brochures and other promotional materials. With CSS help, the cooperative launched its website http://ourgrowers.rs/.

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Traders in Fresh F&V Industry Dotika – Opening new trade channels for fresh F&V in Austria, Germany, and the Netherlands: Dotika has been focusing on conventional and organic fresh berry fruits, peppers, apples, and stone fruits and continually assisting the beneficiary companies in logistics and trade/export issues to export to German-speaking marketers: > Facilitated relationships with buyers and distributors: Met 16 potential buyers and distributors at relevant fresh food trade fairs: FruitLogistica 2019, Berlin; Global Berry Congress 2019, Rotterdam; and Fruit Attraction in Madrid in October 2019. > Finalized agreements with Serbian beneficiary-companies. Signed agreements with 3 beneficiary-companies, defined services and obligations of the parties. Incorporated companies/farmers from West Serbia. > Provided customized trainings for beneficiaries addressing food safety issues and product certification (Global GAP and organic), 2 trainings for 4 beneficiary companies. > Finalized contracts and commenced ongoing export of plums, blueberries, and peppers. Ex- ported 40t of blueberries to Austria, Germany, Netherlands, and Switzerland valued $132,000. Exported 20t of plums exported to Germany valued $12,000. > Sold mushrooms from a beneficiary to domestic retailer (Lidl) with potential to position regionally. Until October 2019, the value of sold mushrooms was $130,000. In 2020, Dotika will continue with the expansion of its portfolio of fresh F&V for the German market and is planning to increase volumes/value of exported fresh berries, plums, cherries and peppers. CSS is planning to support Dotika’s activities in attracting new SMEs, cooperatives and individual farmers into export-oriented value chains.

MoA Extension Services Agriculture Extension Services (ES), the advisory unit of the MoA represent a network of 23 offices in Central Serbia. ES's principal task is to provide farmers with relevant information regarding trends, food safety and quality standards for both local and international markets. In order to raise the general level of awareness of growers/farmers of the importance of standard implementation and healthy food production, the Project supports capacity building of ES unit on Glob- alGAP standards. SGS, a renowned international inspection, verification, testing and certification service provider, held the Project-supported second part of the Training of Trainers (ToT) for the Ministry of Agriculture’s ES on introducing the GlobalGAP quality standard to local producers and growers. Three field visits were organized for 120 ES staff members and advisors, specifically 40 service providers from the three sectors: fruits, crops and vegetables production and plant protection. On-site field visits were organized to GlobalGAP certified producers, including Ivan Veljković’s sour cherry farm in Grudaš, Ilija Bošković’s farm in Šabac and Goran Mladenović’s farm “Zadruga Zelena Bašta” in Saraorci. The field visit aimed to introduce the ES advisors with the exemplary GlobalGAP-certified fields and to provide them with the insights into good agricultural practices. This activity helps build capacities of the agricultural advisory services to transfer knowledge to private sector businesses, which will increase the number of GlobalGAP-certified producers, therefore enabling them greater access to leading local and regional retail chains. It also directly helps Project partners - traders and export facilitation partners’ efforts in identifying export-ready businesses to get their products placed in integrated distribution networks and retailers requiring Global GAP certifications and standards.

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2. Frozen F&V Sector Frozen F&V, the most competitive segment of the Serbian food processing industry, is facing increasing pressure from international competitors. Key activities to further increase this segment’s competitiveness are: > Consolidation of Serbian products targeting higher-value markets (i.e. finished/retail-ready products, private label and organic); > Diversification into other crops and products (organic) To consolidate the fragmented industry, CSS piloted activities with leading Serbian exporters. These “Industry Leaders” are developed models to provide market opportunities for micro and small firms negatively affected by the increasing competition.

Industry Associations The Union of Cold Storages is undergoing a key management change. Project plans to assist building the capacity by identifying professional staff that can improve internal management capacities and set up new funding, promotional and marketing strategies for the members, as well as transfer knowledge to the rest of the industry about ILCs model successes.

Industry Lead Companies as Business Integrators Fortis (new organic products and sale channels): Organic sector offers a significant opportunity for integration and development of small agricultural households. Through group certification and care- fully selected crops, organic production could become a core segment of Serbia’s agricultural industry. Fortis is one of the largest producers and exporters of organic frozen berries in Serbia. The company collaborates with a large number of farmers. Thru CSS support, 246 potential new suppliers have been prepared to enter Fortis Value Chain. This includes 31 growers from Bojnik organically certified and a total of 215 growers from Zlatibor (28), Macva (21) and Kolubara (166) groups expected to be certified by January 2020. Finally, the Fortis Network increased by 169 new members that have joined group organic standard certification. Thanks to the signing of a contract with three French retailers (Carrefour, Douceur de Verger, Legave) in 2019, Fortis sales of organic products at 1,675 tons more than tripled compared to 2018. Fortis also managed to reach the new market (North America, Canada) with HoReCa conventional fruit products, they delivered 300 tons in two months, with the possibility to expand the sales in HoReCa and retail organic fruit products in 2020. Due to these new business opportunities, Fortis invested around $400,000 into new equipment and reorganized part of their facility from conventional to organic production. Sirogojno Company: Sirogojno partnered with CSS to address the issues of the food safety management system, product standardization and integration of a significant number of farmers and SMEs into their value chain. These capacity building activities have already provided results: > Achieved an increase of 11.9% in the sales of frozen fruit (10,411 tons by Nov 30, 2018, vs. 11,650 tons by Nov 30, 2019). The increase in sales is directly linked with the increase in quantities purchased from both farmers and newly integrated cold storages. > Signed 3 new agreements with renowned international buyers/retailers: Tesco UK, Swiss retailer Migros, and Delhaize/Greenyard Belgium). > All exported frozen fruits to these international buyers were value-added, i.e. small, retail packaging. > Invested in the new, state-of-the-art private laboratory for food-safety control. Based on the impression of the international buyers who visited the laboratory, the implemented food safety system is matching corresponding systems in the EU.

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> Quantities sold to Tesco were doubled in comparison with the previous season (6,000 tons in 2019 vs 3,000 tons in 2018), due to introducing new retail products and increased sales of existing products. Sirogojno expects further sales increase to new partners in 2020. > The expert team performed food-safety audits in 14 supplier production facilities prior to trainings and 13 re-audits afterward in order to identify improvements in terms of quality and food safety. The results of re-audits showed improvements with all audited suppliers. 2 new SMEs (Biospirit and Jugprom) were admitted to Sirogojno’s VC. > The Sirogojno expert team continuously monitored the adoption of the Rulebook for farmers before and during the crop season. A specific additional payment of 14,5 Dinars/kg of fresh fruit was defined for farmers who adopted the rules and thus increased their level of quality and food safety. Out of 1,080 farmers, 79.18% received the additional payment. > Organized 3l training sessions for 815 farmers and 5 training sessions for 13 cold-storages staff. Sirogojno will continue to expand their VC and integrate new farmers and companies. CSS invited the general manager of Sirogojno to participate in one of the key-panels during the upcoming AgroBel- grade trade show and present their success story and the integrative agribusiness model.

3. Specialty Food and Private Label Sector CSS recognized a market need for sustainable and scalable food production that uses innovation and modern technologies to create new premium food products and raise the international profile and position the country as a regional quality food leader. To do this, CSS launched three in-house designed business models, Premium Food Design Hub, DM Incubator and Private Label (PL) Training Center for food export facilitation. CSS also engaged expert trade partners specializing in specific product groups and markets, with the capacity to consolidate fragmented producers.

R&D and Innovations in Serbian Specialty F&V Sector Premium Food Design Hubs (PFDH): The Project continued supporting Serbian food producers, SMEs and startups, to create new, innovative or improve current products, to place the products in national retail chains and access domestic and international markets. This was implemented through selected two hubs – BIPs Food Hub and Desing Taste Center (DTC). 16 new companies with proven and significant market potential, in specific market segments such as functional food, healthy/organic food, snacks and kids food, received significant support within a 3-month boot camp. This year, along with selected SMEs, Desing Taste Center provided full- range assistance to national Ecotrophelia winner, CandyMoo, and increased their presentation capacities which put the on 7th place in strong international competition Ecotrophelia 2019 in Cologne, Germany. Food hubs successfully supported promotion, access to markets and access to finance of the new PFDH beneficiaries’ products and businesses. PFDH stands were set at four trade fairs in Belgrade - BFS 2019, Ukus Fest, Sladak život and Ethnic Food and Drink Fair, supporting companies to showcase their newly developed products and establish communication with potential buyers. A special PFDH promotional weekend took place at the well-known Olivia organic store in Belgrade. During these events, companies have established contacts with domestic retail category managers (Ahold Delhaize, Mercator S, Aroma and DM) and international buyers from the USA, UAE, EU countries and CEFTA.As a direct result of the BFS 2019 exhibition, Polo Premium has received the first order from distributor Balkan Sky Trade for export/product placement/ of Premium fruit spreads on the USA market. Some of the results during this quarter include: ✓ Pekara Kljuc, increased its attractiveness to other donor programs and became a part of the UNDP Trade Promotion Pro- gram in cooperation with ENECA. As a results, it had two international trade fair presence at Interfood & Drink Sofia 2019 Sofia, Bulgaria and World Food Moscow in Moscow, Russia as unique opportunities to establish contacts with foreign buyers. ✓ KeyBar had intensive discussions during these fairs about potential outsourcing of production to Bulgaria or Bosnia and Hercegovina, product placement in Bulgaria and export of organic bars to Germany. ✓ Cold Pressok was part of the PKS exhibition stand at Israfood Tel Aviv 2019 in Israel where the company succeeded to arrange business deals worth close to 1 million euros.

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✓ Desing Taste Center oversees potential trade deal with “Petrol” company from Slovenia for the enlistment of Cold Pres- sok, Immuniser and Key Bar products in their outlets. Agro Iris exported its first batch of products to the DM chain in Mac- edonia. In December, BIPs Food hub and DTC organized a joint trade mission with French buyer Mr. Alexandre Bralovic from Maisson Brasson. Mr. Bralovic met with six companies from BIPS and Desing hubs: Prpa Jomi, BMP Nutrio, Radanska ruza, Cold Pressok, Agro Iris and Zivi 100. Negotiations with companies about exports to France and placement in retail and HoReCa are undergoing. The results of the negotiations are expected in the second half of January 2020. Desing Taste Center sent a presentation to the European Institute of Innovation & Technology (EIT) Food and received approval to apply for EIT Food membership. Desing Trade Center team helped set up contact between CandyMoo team and the Association of authentic hedonists in late October. As a result, Cheese Academy was established on December 5, as a hub-like model to support innovations and promotion of start-ups and small producers of cheese in Serbia.

Premium Food Design Hub 2019 supported showcase and sales of newly developed products - Ethnic Food and Drink Fair 2019 and b2bs with Maisson Brasson, buyer from France

DM Incubator – Industry crowding in around the PFDH concept: As an immediate market replication of the Project’s PFDH initiative, in October 2018, CSS with dm drogeriemarkt (DM), launched the DM Incubator to mentor and support 17 food, beauty and cosmetic producers to place new innovative products in DM’s retail network of 99 stores in Serbia and potentially south-east and central Europe. Out of the 57 developed products, 28 are cosmetics while 29 are from the food assortment segment which proved our domestic producers’ ideas quality in both assortment areas. After initial enlisting in late September 2019, DM has been closely monitoring the sales of Incubator products, with the latest break-even late December 2019. According to new sales data, 17 companies achieved close to $95,000 with over 20,000 products sold. Top performers are companies Zoya, BMD, Nisha and Biona holding more than 60% of total sales. The company plans to further monitor sales and eventually recommend the top performers to be sold on the shelves of DM stores regionally. The continued strong performers will eventually be placed in 3,000 DM stores in the EU market, based on their sales results performance. This will create opportunities for DM incubator beneficiaries and their newly developed products to exploit the potential of other European markets thus embracing further sustainability in the long run. DM plans to further invest in the promotion of DM Incubator products in the country and provide all necessary support to exports and enlisting of best performers on the shelves of DM stores abroad.

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Private Label (PL) Training Center: The Project recognized private label as a great opportunity for SMEs to approach domestic and international distribution channels. The initiative, named Private Label Development Center, will, eventually, replicate some of the PFDH elements in this fast- growing food industry segment providing full-size support to new or already established businesses from Southern Ser- bia with high-quality quality products to increase their competitiveness on foreign markets through PL channels. CSS partnered with ENECA, a Nis based BSO with a proven track record in SME development programs, to promote and bring attention to the private label opportunities. ENECA organized mentoring support in business development, PL management, food safety and technology, access Black Grass company from Vlasotince produced PL vegetables to PL market and access to finance to help 11 beneficiaries get ready for negotiations with category managers. ENECA is under preparation for the establishment of the PL Associ- ation in Serbia, to become operational in February 2020.

Table 4: Private Label Development Center 2019 beneficiaries

Polo doo, Čačak Aronija Nero PR, Aleksinac Master food doo, Užice Bojan Rajkovic PR Radnja za preradu voca i povrca ,,Black Grass" PPR Healthy food Lazić, Mozgovo ES Komerc doo, Prijepolje Aleksandar Đukić PR ALEGO APETISAN Promo Pen Doo, Čačak NISHA doo,Crna Trava OZZ AGRO EKO VOCE, Arilje (cooperative) Sve domaće,Čačak

Development of technology transfer and innovations support network CSS signed a grant agreement with the Serbian Food Technology Council (SFTC) for the development of technology transfer and innovations support network. SFTC will help create a tailored Zero Waste model to domestic companies' needs and develop innovative ways to transform food production waste into new and shelf-ready products. SFTC conducted workshops about Zero Waste model in Aleksandrovac, Kučevo and Leskovac. SFTC works actively on the development of a network of potential partners, including local chambers of commerce, local economic development offices and retail chains. Six companies and four cooperatives will benefit from the activity. The PFDH business model is replicated into SFTC activity, increasing awareness, offering new solutions for food production waste management with support to domestic companies to become more energy efficient. Initial Analysis Study of the Wine Sector in Serbia The Project prepared the initial analysis of global trends in the wine sector, specifically for the autochthonous grapevine varieties. The foundational approach of the Project lies in the strategy to select informed and targeted key-value chains/products that have potential for scale-up and to compete in demanding export markets. It was concluded that the wine segment is a natural fit to Project activities under the specialty food segment. Activities under the specialty food segment have a strong branding and marketing component, where Serbia is internationally and domestically being positioned as a country of sunny weather, pristine nature, and delicious food and wine. Thus, the focus under the wine segment should be placed on promotion of unique and autochthonous varieties, and close cooperation with GoS to support these efforts. Wine, as a part of these market systems-oriented activities, should see an increase in exports

Quarterly Report #11: Year 3, Quarter 3 Page 11 and investments in the industry. The study presented the analysis of production, consumption, marketing, export/Import, competitiveness, wine sector history in Serbia. It also provided the current review of wine industry in Serbia, regulatory framework review and comparative analysis with EU regulations. Most importantly, it provided the analysis of autochthonous varieties (special focus given to Prokupac and Tamjanika), including the current production and support levels. A set of recommendations for the potential Project’s activities to improve sales (export specifically) of autochthonous varieties was presented.

Export facilitation partners (Traders) Market access in the specialty food industry is difficult and somewhat of a novelty for Serbian firms. CSS is addressing this issue by developing a cadre of specialized export facilitation partners to open doors in targeted different, niche international markets. Trofej – retail-ready products to CEFTA: Trofej, a regional company based in Serbia and Macedo- nia, is focusing activities to recognize niche, specialty food producers from the south and central Serbia and build capacity to export to markets in south-east Europe. Trofej successfully exported first batches of specialty dried fruits to Macedonia. The products were created by the social cooperative enterprise “Agro Iris”. In addition to six companies, Trofej team contacted and audited three new Serbian companies/startups to explore possibilities to export their products including Vagapcici, Cold Pressok and Immuniser. Ko-Voli – Serbian specialty food access online platforms: Ko-Voli trade activities are directed towards facilitating the export of Serbian companies to the United States and selected international markets, through sales on Amazon and PL distribution channels. Ko-Voli also facilitates cooperation of Serbian and international companies through PL-related activities. Ko-Voli helped export of 10 SKUs from three specialty food companies StanišićBio, Real Red Rasp- berry and MinCommerce, as part of their road to Amazon online sales platform. Goods have arrived in the warehouse in Chicago, IL in mid-December, now following the Amazon procedure to be offered for further distribution through online purchase orders. These purchases are hosted on previously developed unique Good Food & Stuff website and uploaded to Amazon listing profiles. The profiles will become active once the goods are declared ready for distribution -following strict labeling requirements introduced by Amazon. It is expected that the products will be sold through Amazon Grocery & Gourmet Food listing starting 2020.

Amazon profiles developed for KoVoli beneficiaries and their selected products: Gurman Chilito Hot Sauce https://www.amazon.com/dp/B082FN2XMW Gurman Chilito Sweet Hot Sauce https://www.amazon.com/dp/B082FP5WKW Gurman Delish Spicy Plum BBQ Sauce https://www.amazon.com/dp/B082FP94ZB Real Red Raspberry Fruit Spread https://www.amazon.com/dp/B082DQDQ14 Morel Mushroom Spread https://www.amazon.com/dp/B082GJB8RX Chanterelle Mushroom Spread https://www.amazon.com/dp/B082GF3W3J Black Truffle Mushroom Spread https://www.amazon.com/dp/B082GKBWJQ Black Trumpet Mushroom Spread https://www.amazon.com/dp/B082GJGXVG Porcini Mushroom Spread https://www.amazon.com/dp/B082FJXW4W KoVoli has opened access to other buyers, dominantly gourmet shops in the USA and the EU to offer these products - DiBruno Bros, ZABAR'S, PV Euromarket, Zingerman's Mail Order, Malincho.com, City Fresh Market, Ukusi Balkana, Balkan Fresh, and Gourmet Food International. Agro communications – Serbian high-value food to German markets: As the third-largest importer of agricultural and food products worldwide and with 82 million consumers, Germany is an attractive target market for Serbian products.

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Agro-communications, as one of selected trade facilitators, targeted buyers and delivered samples of selected beneficiaries of healthy/specialty/functional products to food chains and specialty stores in Germany and Austria. This includes some of the leading importers and distributors in these countries: Bos Food, Dusseldorf, the largest fine food distributor in Germany, Dima, Austrian-Iranian importer and distributor of fine ethnic foods covering all Persian shops in the EU (Austria, Germany, and Hol- land), and Edeka stores (Edeka Süd Bayern with 1,350 outlets). Trade facilitator has scheduled a trade mission to Germany in late January to directly present samples and start negotiations with two large importers and distributors of bio and ethnic food in Germany, namely Bosfood in Düsseldorf (www.bosfood.de) and Gourmantis (www.gourmantis.de) in Camberg. International buyers expressed interest and ordered initial quantities to be placed on shelves and offered for sales. The first sales result generated from the activity are expected to be achieved in early 2020.

Industry Associations Association for Promotion of Serbian Food (APSF): The Project continues to partner with the APSF to create a sustainable platform for showcasing Serbia’s innovative, high-quality premium food products, and to raise the international profile of the country’s specialty food scene. APSF activities focused on the final preparations and implementation of the BFS 2019, but also on further capacity building and planning- strengthening of professional Association management, organizational structure and annual assessment plan. APSF Executive Manager is engaged and started working in October. APSF prepared and organized the 2019 event and tailored its key services for Serbian SMEs by providing knowledge about global trends, access to markets, B2B connections, and visibility in domestic and international markets.

The event included a two-day trade fair, conference and b2b meetings. 114 exhibitors from the fruit, vegetable, meat, and dairy industries. This included over 20 innovative companies with unique products that are part of the Premium Food Design Hub and the dm Incubator. The conference included 17 sessions with 67 panelists and lecturers who participated in the educational sessions during both days. B2b zone, with more than 200 meetings organized at 24 working tables in 16 time slots, where food producers and domestic and foreign buyers discussed future cooperation and partnerships. 57 foreign and domestic buyers could be found at a food exhibition and conference. There were 11 foreign buyers invited as part of the hosted buyer program, coming from the UK, Netherland, France, Norway, Czech Re- public, Sweden, Montenegro, USA and Lebanon. At the ceremonial opening, Deputy Prime Minister of the Republic of Serbia, Zorana Mihajlović and USAID Acting Mission Director, Shanley Pinchotti addressed a 350-plus person audience in attendance. The event included a two-day trade fair and a conference where leading industry experts discussed the latest trends in the Photos (top-bottom): the BFS 2019 Exhibition and Conference food industry, Serbian export opportunities, tasting methodologies, the importance of branding for a country’s image. One of the most intriguing presentations was delivered by Jose Filip Tores (Bloom Consulting) about the importance of country branding, Serbia’s positive image in the world gastronomy and excellent

Quarterly Report #11: Year 3, Quarter 3 Page 13 starting point for future national branding via premium food segment. Also, visitors had a chance to learn how Superior Taste Award help better product placement and enjoyed the demonstration of product testing given by renowned chef Alan Coxon, who visited BFS second year in a row. The novelty of this year's program was the first investment pitching session for companies from the food industry. BFS helped exhibitors identify investment opportunities and business partnerships. 10 companies were prepared. Five were selected to participate in a pitching session with nine strategic food and beverage investors with the goal of raising business development funds. There are clear in- dications of first investments for three companies, for five contracts, two equity investments and three strategic partnership contracts. BFS generated extensive positive media coverage with over 80 media references in national, regional and local media outlets such as N1, TV Prva, RTS1, TV Pink, Happy TV, Studio B, Danas, Politika, Nedeljnik, Večernje Novosti, Radio Beograd 1, Tanjug, Beta, eKapija.

Photos (top-left to bottom-right): BFS 2019 Workshops, Serbian deputy PM Zorana Mihajlovic, lecturer Jose Filip Tores, cheff Alan Coxon and visitors taste the food, and B2B meetings with buyers

4. Other Initiative Agro Belgrade 2020 Fair The Project supports the International Fair of Fruit, Wine and Vegetables - Agro Belgrade 2020, which will take place from January 30 to February 1, 2020 at the Belgrade Fair. The Fair includes the three-day International Conference where the Project will organize eight panels. The goal is to contribute to decreasing gap in competitiveness of F&V processing, as well as increasing awareness of micro firms and small holders about their opportunities for global market access and benefits of using modern technologies. In one place, attendees will be able to learn about production standards, certification process, organic food standards, opportunities to place products on the world market (e.g. berries), current and future programs in agribusiness financing, food safety and export procedures and the agrarian workforce today. Panel Discussion about Modern Cooperatives In partnership with the Serbian Union of Cooperatives (ZSS), CSS organized the panel discussion “Modern Cooperatives - How to Create a Successful Business Model” at the 14th Ethnic Food and Drink Fair. The panel moderated by Milos Pejcinovic from APSF included Nikola Mihailović, the president of the ZSS, Božo Joković, the Director of the First Serbian Union of Cooperatives “Naši Voćari”, Viktor Nedović, State Secretary in the Ministry of Education, Science and Technological

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Development, Milivoje Jovanović, Program Director ENECA, and Igor Kojčić, Project Manager at Initiative for Development and Cooperation and founder of Agro Iris. The panel presented the business models and successful examples of cooperatives that have adopted innovative production practices. The speakers agreed that cooperatives in Serbia should be included in the creation of innovative Ser- bian market business models to make cooperatives more efficient and profitable. The Project will continue supporting cooperatives to increase competitiveness by improving their production, management and sales processes.

Workforce development CSS actively engages with educational institutions and the private sector to develop models of cooperation and workforce improvement programs. If Serbia’s food processing industry is to become competitive in international markets, research, innovation, and knowledge transfer have to be tailored to respond to immediate and future industry needs. The creation of sustainable internship programs for the food processing industry, new educational models and stronger systemic links between academia and the private sector are not “one-off” interventions but are sustainable and will produce systemic changes. Professional Certification Courses

Partnership with the University of California (UC) Davis: One of the most practical ways to support stronger linkages between academia and the industry is for academia to provide practical services that address broader industry needs. To this end, professional, short-term certification course “Modern Technologies in Post-Harvest Handling of Fruits and Vegetables”, first of its kind in Serbia, was developed by the FoA in partnership with the UC Davis Postharvest Center, one of the global premier agricultural universities, which has been offering similar course over the past 40 years. FoA is implementing this effort through AgroNET – Centre for Education and Research founded by the team of professors from FoA, in order to be more responsive and agile with implementation. UC Davis Postharvest Center as a partner provided the knowledge transfer and best practice examples to the AgroNET team towards successful course creation and implementation. Promotional info sessions in Novi Sad, Niš and Valjevo organized with PKS in October generated great interest among companies. The Certification course was held on December 2-7, 2019 in the Science Technology Park in Zvezdara, Belgrade for 36 participants from 24 various Serbian food processing companies, and guests from Montenegro. Course was comprised of four days of theoretical part and two days of industry visits. Participants had a chance to get acquainted with post-harvest biology, ripening process, modern cooling equipment, packaging and logistics, digital marketing and brand development, access to finance, as well as the future trends in the fruit and vegetable industry. The course materials were presented by AgroNet experts and other professors from the FoA, including some of the most experienced industry representatives (Iceberg Salad Centre, Supply Chain Solutions and Logistics, and Altabox). Two-day visits to industry facilities provided the participants with an opportunity to see the latest technologies in the food industry, visit modern growing and storage facilities. This included visits to La Linea Verde in Ruma (modern full-circle fresh salad producer), Podunavlje in Čelarevo (part of Delta Agrar), Pollino Agrar in Irig (modern apple plantation with cold storage), Elixir food (one of the biggest exporters of frozen fruits and vegetables), and a visit a farm household of Marko Čarnić in Begeč (the biggest domestic carrot production with latest technology). The course included some practical demonstrations and exercises where the participants were actively engaged in setting the ex- periments in using different tools for measuring the level of ripening of apples, measuring the level of sugar in fruits and testing different types of packaging of fruit and vegetables. Participants evaluated the course with an average score of 4.5 on the scale from 1 – 5, which is an excellent result that proved how valuable this course is for the industry.

AgroNET post-harvest certification course lectures - practice and theory

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Partnership with Oregon State University (OSU). The Project explored the possibility of a joint extension project between OSU and faculties of agriculture in Central and South Serbia. The most interest- ing OSU’s program is the Small Farm Program, which provides small farms with training and research to support their long-term financial and environmental sustainability. The Project signed an MoU with the Faculty of Agronomy in Čačak in September 2019 and is in the process of signing a Letter of Collaboration with OSU. Several meetings were held with the Faculty of Agronomy from Čačak and OSU representatives during 2019. The Project decided to involve Si- rogojno company in this collaboration and to try to combine the concept of the Small Farm Program with the idea of Farmer’s college that Sirogojno intends to establish. Partnership with Private Sector for New Educational Models Working with the export-oriented companies on developing new educational models will equip students with the skills and knowledge required for the business world, not provided by traditional curricula at Serbian universities. CSS partnered with LUKOWA in implementation of the 2018/19 LUKOWA Académie program designed to increase interest in the food industry among students and strengthen workforce development by guiding them through real business situations solving real-life company problems using the case study model. The program was realized in close cooperation with three University of Belgrade’s Fac- ulties, Organizational Sciences, Economics and Agriculture. The new 2019/20 LUKOWA Académie 2.0 program enrolled 28 students. Most students are from FoA (12) and the rest of the students came from the Faculty of Economics (FoE) and Faculty of Organiza- tional Sciences (FON). As part of the Memorandum of Understanding (MoU) between Lukowa and FoA, an additional 17 FoA students will receive a chance to participate in the Lukowa’s “Food Inno- vation Lab” program, where they will experiment with creating new, market-ready food products. Bringing world-class knowledge and expertise to students will increase interest among young people to work in the local food industry, and help students develop real-world problem-solving skills and business acumen needed to work at leading global companies in Serbia. On December 8, the second edition of the LUKOWA Académie 2.0 organized the Innovation Chal- lenge Day at the FON, a competitive event where students apply their practical knowledge and skills to solve a real-world business problem. This year, the task was to develop a strategic plan to strengthen the current B2B business model of LUKOWA and provide a long-term innovative solution for the next five-year period. Six student teams presented their solutions and ideas to a panel of judges comprised of representatives from LUKOWA, Ernst & Young and the Project. Three best ranking teams received prizes, along with the best presenter award, and all 28 participating students were awarded certificates of completion in Sales and Corporate Communications from the LUKOWA Académie. Tailor-made Internship model for the food processing industry Support to youth entrepreneurship and innovative products bridges the gap between academia and the F&V industry, increase employability by providing skillful labor and motivates young people to join this sector which is all to ultimately contribute to the development of Serbian agriculture. CSS partner Youth for Impact (YFI) developed the first standardized and sustainable model of internships in this sector, suitable for students of agriculture, management and economics which the companies will be able to implement independently after project completion to improve their capacity and workforce. The activity ended in September, however the Project continues to support the implementation of the internship model and link it to future activities. For example, the project supported the printing of the Manual for implementation of the students’ internship in food processing industry developed by the YFI experts’ team and continue to encourage them to promote this unique Internship model at fairs and other public events (i.e. Agro Belgrade fair in January 2020 etc.)

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Ecotrophelia – Serbian Association of Food Technologists (SAFT) For the second consecutive year, CSS provided support to the Serbian Association of Food Technolo- gists to organize Ecotrophelia Serbia and supported Serbia’s team to participate in the Ecotrophelia Europe Finals. The national student competition of eco-innovative food products, Ecotrophelia Serbia 2019 was organized In June 2019, by the Serbian Association of Food Technologists (SAFT) with support from the Project and the Scientific Technology Park in Belgrade. This year’s event was organized under the auspices of Ecotrophelia Europe, the Ministry of Education, Science and Technological Development, and UNDP. It attracted nine student teams from three universities. This 100% increase in student interest compared to last year is partially due to extensive promotional activities by CSS. The Project supported CandyMoo team from FoA, the winner of Ecotrophelia Serbia, to take part in the Ecotrophelia Europe Competition in Cologne. The Ecotrophelia’s European Food Innovation Stu- dent Award finals were held on October 6-7, 2019 as a part of the ANUGA exhibition, the world’s largest trade food fair. Seventeen university student teams, in collaboration with respective national food associations, competed in the creation of innovative food products. The 23-member jury awarded CandyMoo’s MoCaMela product (cheese with molasses and honey), 7th place among 17 other participating EU teams. The Project also supported CandyMoo with their promotional activities through the Desing Taste Center, Olivia Market, Delicent Market, the Faculty of Organizational Sciences and the Case Study Club, as well as through participation at the BFS and the Balkan Cheese Festival, where they received a special Innovation Prize. With the assistance of the Project, the winners of the Ecotrophelia Serbia program attended the promotion of the mentor program for the professional development of managers, organized by the Serbian Association of Managers (SAM) and learned the experiences of mentors from the previous cycle. The Project is making efforts for students to enter the next cycle of the SAM mentor’s program, as another step on the way to promote youth entrepreneurship. This activity is a part of the broader Project’s efforts to bridge the gap between academia and the F&V industry, increasing employability, by providing skillful labor and by motivating young people to join the sector. The Project is negotiating with the MoA to financially support SAFT for the organization of Eco- trophelia in the future and ensure the sustainability of this important activity. Additional Efforts > On October 31, Allessandro Silvestri, from the Sussex University (UK), held the lecture „Ex- port strategies and planning in agri-sector“ at the Agriculture Club with the assistance of the MoA. The presentation provided an overview of the European market, human capital as a key internal factor to stimulate growth and competitiveness and business support services as a key external factor to stimulate growth and competitiveness. Twenty participants from PKS, Agri- culture Extension Services, Cooperative Union of Serbia and Food Inspection attended the lecture. > Project organized a meeting at FoA, between Ms. Sarah Hennesey, USAID Country Assistant Coordinator U.S. Assistance to Europe, Eurasia, and Central Asia, and several Project-supported partner organizations. The meeting served to sow how the Project’s workforce development initiatives are creating sustainable linkages between academia and the private sector to address the real-world needs of the food industry. AgroNET, LUKOWA and YFI presented their programs. SAFT Director and the State Secretary at the Ministry of Education, Science and Technology Development, Professor Viktor Nedovic talked about the challenges in the local food industry, such as young people’s lack of real-world problem-solving skills upon entering the private sector, other technical and educational skills gaps, and obstacles confront- ing food entrepreneurs in foreign markets.

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> Together with USAID’s Cooperation for Growth Project, CSS supported an event organized to mark the 60th anniversary of the Institute for Food Technology and Biochemistry (Institute), a leading education and science institution in the field of food production, conservation, and food safety. Keynote speakers at the event included: Dean of the FoA Dušan Živković, Institute Director Miloš Rajković, and Director of USAID’s Office of Democratic and Economic Growth in Serbia Shanley Pinchotti. The speakers placed emphasis on the important work of the Institute over the years, the potential of Serbian food products to promote the country’s brand internationally, and the continued importance of strengthening cooperation between academia and the food industry. Over 500 representatives from academia and the private sector, including former and current students, attended the event. The event featured an informative segment to promote the work of Project-supported partners, including Youth for Impact’s new internship model for the food processing industry; and Ecotrophelia, a student competition for creating innovative food products. The event generated extensive coverage in national-level media outlets and social media platforms. The Project continues to support youth employment and entrepreneurship initiatives by bridging the gaps between academia and the private sector to improve skill sets and better prepare young people for the real-world.

Access to Finance Lack of access to finance is one of the main constraints to growth and competitiveness which specifically affects MSMEs. In the highly fragmented industry in terms of sales volumes and scope and organization of operations, the majority of companies are too big for microfinance and too small or risky for traditional bank lending. Micro and Small players have limited potential and strength for continued and sustainable growth, and stable revenues and returns. MSMEs have traditionally been treated as a homogeneous group fully ignoring the financing needs of different types of MSMEs at different stages of the business cycle. SME Sector depends on bank financing for working capital and major investments and strongly relies on internal sources for small and mid-size investments which are especially evident in the Micro segment. Many Serbian agribusiness MSMEs lack the capacity to identify and utilize sources of financing available to them. This includes State funds, EU funds, commercial banking options, and grants. This also includes the IPARD program, a critical chance to upgrade the capacity of Serbia’s food industry. While there is increasing interest and application flow for IPARD, State administrators (MoA) are slow in executing IPARD approvals, thus further postponing investments for growth and technological ad- vancement in the industry. Alternative financial sources, such as equity investments have been scares and reserved only for well- established market leaders in the food processing while alternative venture capital remains untapped by the sector. Foreign direct investments (FDIs), can further support SME development and sound economic growth in the agricultural sector.

DCA guarantee scheme

Loan Portfolio Guarantee Agreement (DCA Guarantee) between USAID DCA and three commercial banks will support 60% of principal losses on loan disbursements made to agriculture qualifying borrowers up to a portfolio totalling $90,909,091 over a 12-year period. On December 12th, the Project organized a press conference to announce the start of this significant lending program. USAID Ser- bia Mission Director Mike de la Rosa and the MoA minister Branislav Nedimović launched a loan portfolio guarantee with ProCredit Bank, Addiko Bank, and Banca Intesa.

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After completion of extensive negotiations which began in early 2018 between USAID and MoA, two parties signed Agreement for Cooperation to set up a DCA Loan Guarantee with Serbian commercial banks. Agreement was signed on May 13, 2019, between USAID and MoA. DCA Guarantee is designed to facilitate long-term investment lending to private sector MSMEs in F&V industries throughout Serbia including less developed regions of Serbia and newly established companies. DCA Guarantee is risk-sharing tool between banks, MoA and USAID which will enable borrowers to receive loans secured with Guarantee providing 60% of collateral coverage for the loan, thus overcoming the problem of securing long-term loans with adequately valuable collaterals especially important for less developed regions of Serbia where a large number of F&V companies are located. ProCredit and Addiko Bank started selecting clients who are good candidates to utilize the Guarantee. Approvals and disbursements of first loans with the Guarantee are expected in February 2020. Intesa Bank will utilize its guarantee to increase lending to individual farmers (registered households) and will start utilizing it in spring 2020. CSS will provide technical assistance to companies and entrepreneurs applying for loans with DCA Guarantee. The project had several meetings with USAID and Bank representatives to discuss strategy and activities for utilization and promotion of DCA Guarantee. Companies will be assisted to prepare an application, documentation and business plans for the loan. The project offi- cially launched this service, and information is available through the project website and social media. The Project has already started promotional and educational activities relevant to DCA Guarantee scheme. Guarantee and its benefits were presented by two implementing banks and CSS during Financial trainings in Central and South Serbia for MSMEs companies in F&V value chains in June 2019. DCA Guarantee was presented to over 30 participants of AgroNet post-harvest certification course in Belgrade in December 2019. CSS has been already identifying companies that are good candidates to receive loans with DCA Guarantee. All candidates are promptly directed to Addiko or ProCredit Bank for a preliminary assessment. The first company to receive approval for a loan with DCA Guarantee in December 2019 for the investment loan in cold storage equipment of around $400,000 was refereed to Addiko Bank through CSS finance technical assistance.

Increasing demand for finance In May 2019, CSS concluded bidding and negotiations with business and financial consultants and signed Framework Service Agreements (FSA) with selected consulting firms. Three firms Sim Cert, BDO, and ACDE, with a track record in the food processing industry, have been selected to support MSMEs in facilitating access to finance through individual technical assistance. This includes training, personalized mentoring and development of tailor-made investment plans and facilitation of the borrowing process with a selected lending institution. Over 40 companies participated in full-day Info Sessions in Vrnjačka Banja, Niš, Zaječar and Užice, and additional 7 companies received group trainings in Niš and Čačak. Info Sessions provided in-depth overview of currently available sources of funding through banks and various State agencies including IPARD. From July to October 2019 over 25 companies who did not participate in group Info Sessions have been visited by consultants and project finance lead and received one to one Info sessions with the focus on their specific financing needs. With over 70 companies who participated in Info Sessions the CSS Project fulfilled its target of 60 companies to receive Access to finance training in Year 3. During Info Sessions IPARD program received the highest attention as it enables the program beneficiary to receive back up to 50% of invested funds upon the completion of the investment. Representatives from CSS partner banks ProCredit, Addiko and Erste Bank took part in trainings. During Info Sessions DCA Guarantee was introduced as a new, upcoming lending vehicle, and a number of companies have been already selected as potential beneficiaries of this product.

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From October to December 2019 focus was on mentoring and preparing business plans for already selected 20 companies with investment needs planned for implementation in the following 3-6 months. These companies have been first selected to receive consultant’s investment planning mentoring and preparation of business plans for loan applications. The expected value of investments from this pool of companies is $5-6 million. Until the end of December, three business plans have been completed, submitted to banks and loans approved. The value of these three investments is $1.37 million and they are financed as a mix of bank loans (70%) and internal funds (30%). One of the loans is the first loan approved with USAID Guar- antee at Addiko Bank. Seven business plans and loan requests have been submitted to banks and the Development Fund of Serbia (DFS) and are now in the assessment and/or approval phase. The total value of these investments is around $2.7 million. Four business plans for total investments of $0.5 million were completed and will be submitted to banks during January/February 2020. Requests for the preliminary review of client’s requests for financing have been sent for 5 clients with a total value of investments of $4.5 million. We expect that final approval and finalization of financing structure for $4-5 million in investments already sent or presented to Banks and DFS will be completed until April-May 2020. CSS and consultants are actively working in selecting new clients to enter into the assistance program. It is expected the increased interest among companies and a larger number of applications will come from micro clients as well as from companies with big investments that exceed their current financing capacity without strong collateral support. The timing of applications is closely tied to the opening of State subsidized lending programs or receiving final Approvals for IPARD investment refund from MoA. One of the most attractive State programs, the Program with a 25% state grant administered by RAS, is expected to be opened in April 2020. Subsidized Program with 20-30% state grant administered by DFS was active from October 2019, and one of our applications is now in the approval process while two to three more applications will be submitted in Jan/Feb 2020. IPARD has emerged as a preferable and almost the only attractive financing option for sizable investments in the industry. As such, during initial and subsequent company selection, around half of the companies selected for the project assistance are those who need external financing for carrying out investment approved by IPARD. IPARD approved investments receive on the average 50%, and some even up to 65% refund of invested funds upon investment completion and beneficiaries must first get investment financing. The major issue with IPARD is a very long and slow process of IPARD approval in MoA which usually lasts for 6-12 months. Selected companies have delays in receiving IPARD Approvals from MoA. Approvals were expected during July and August 2019, but instead, first approval arrived at the end of September, and several more in December 2019. Requests for all these clients have been submitted to banks and are now being considered for financing. This is one of the main reasons for delays in submitting more applications to Banks for our selected pool of beneficiaries. While the process of selecting the first pool of around 20 companies interested in immediate investments was completed during summer, there were frequent changes in the selected pool. Turnaround is primarily a consequence of ad hoc changes in the investment plans and investment timing on the part of companies selected for assistance. This, in turn, requires us to constantly search for new beneficiaries and delay the completion of our plans and targets. Alongside with already selected 20 companies, the Project will aim to add up to ten companies for mentoring and business plan preparation under current contracts with 3 subcontractors. CSS has documented lessons learned for future activities:

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> Low investment readiness among MSMEs. Investment plans and implementation timelines are usually vague and lack a clear strategic direction for the company. Our subcontracted advisors had to spend much time with clients in order to define actual investments and start col- lecting supplier offers and other documentation. In addition, some companies have multiple changes in their investment plans. This is especially evident among Micro companies. > Prolonged selection process. The estimated average timeframe from selecting companies with planned investments until completion of the business plan and submitting the application to the Bank (financing institution) is from 4 to 7 months. Processing application and eventual approval can take additional 2-3 months. Thus, the selection of companies has to start much ear- lier prior to the actual acquisition of investment financing. The Project has already started selecting potential candidates for summer and fall 2020 investments. > Need for technical assistance. The Project will have to factor turnaround in the pool of selected companies for technical assistance which can take up to 30% of the initially selected portfolio of companies. Major CSS finance-related activities will focus on creating a pipeline of companies with investment projects requiring consultant’s support in mentoring, preparation of investment plans and applying for loans and grants. DCA Guarantee should contribute to the proliferation of our technical assistance and involve more clients in our program. CSS will proceed with the selection of the new pool of consultants aiming at increasing the reach to beneficiaries and the scope of technical assistance during the fourth quarter of Y3 and throughout Y4.

Growth through Investment financing

In October 2019 the Law on Alternative Investment Funds was passed with the effective date April 20, 2020. Until that date supporting legal procedures and bylaws should be passed or amended to accommodate the creation and incorporation of the alternative investment funds. The project will reconsider the idea of supporting and facilitating the creation of a local investment fund for MSMEs aiming at facilitating investments in agribusiness. In order to overcome the absence of investment funds specialized in investing in food companies and non-bankable clients, CSS is presenting suitable and innovative financing options especially to micro and start-up companies that are especially disadvantaged for using traditional banking products. Some such products include start-up loans by Erste Bank (step by step loans), a crowdfunding platform that was launched in Serbia through the Ventu platform in December 2019, and EU PRO loans. Almost all companies from the project-supported food hubs have been informed about these opportunities. In October the Project provided support to three micro-companies to apply for the EU Pro loans for start-ups for investments worth ~$100,000. The final beneficiaries of this program will be selected in March 2020. During September 2019, CSS engaged an advisory company SEVEN to prepare 5-10 companies for the first Pitching session in Serbia for companies in F&V industries that took place during BFS. Ten companies interested in equity investments ranging from $50,000 - $300,000 received intensive 4 weeklong training for the preparation and presentation of their businesses as attractive investment opportunities. Five companies pitched in front of a group of 9 local and regional investors in the food industry compris- ing large domestic producers and regional investment funds. After the pitching session, investors and companies organized over 20 individual B2B meetings. As a result of follow up meetings and discussions, two companies started the process of negotiations for equity investment of ~$220,000 and two companies started the process discussing strategic partnerships for production and distribution of their products valued at ~$600-800,000. More deals are expected as a result of this successful event. Two best-ranked companies as judged by investors will have an opportunity to participate in Belgrade Ven- ture Forum in May 2020 and search for international equity investors. Belgrade Food Show 2019 pitching sessions CSS will continue to work on attracting the interest of individual investors and investment funds for investing in Serbia and agribusiness through events such as BFS, Belgrade Venture Forum (May 2020) and follow up of Investment conference in Abu Dhabi (December 2019).

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FDI, Government Subsidies and increasing competitiveness Agriscape Investment Exhibition and SIAL Middle East Fair Project continued to promote the umbrella brand and adapted slogans to raise the international profile of Serbia’s fresh fruit and vegetable producers in order to increase sales and exports in international markets. The Project’s unified branding strategy was used to present investment opportunities in Serbia’s agribusiness sector in Abu Dhabi at Agriscape, an investment-oriented international exhibition, held on December 9-10, 2019 and at SIAL Middle East, regional fair of SIAL (originally SIAL Paris), world’s largest food, beverage Umbrella brand “Serbia Does Food” used at investment exhibition Agriscape, Abu Dhabi, December and hospitality exhibition. The events 9-10, 2019. served as an opportunity to present Serbia’s FDI opportunities to global investors. As the idea was to present the advantages of Serbia as a country for high-quality agricultural production, food processing, trade and distribution, with a favorable investment climate, the Project used the umbrella brand to develop a stand design at Agriscape in line with the unified branding under the “Serbia Does Quality Food” slogan. The key message of the stand successfully presented Serbia as a country replete with high-quality, healthy food and viable opportunities for agribusiness investments. The informational brochure capturing Serbia’s brownfield, greenfield and joint venture investment opportunities, as well as the promotional marketing materials were given out at both Agriscape and SIAL events.

Competitiveness Strategy Study Project selected a subcontractor for the purpose of preparing the Competitiveness Strategy Study – study for the MoA on regionalization of subsidies, as per the Y3 Work Plan. Initially, the MoA had shown support for the CSS suggestion to develop a competitiveness study that would inform subsidy system regionalization of financing. The Competitiveness Strategy Study objective is to increase understanding of the benefits of targeted subsidies for competitiveness of the F&V sector, identify and recommend policies and programs/measures that GoS can use to increase competitiveness of the F&V sector and to contribute to informative decision-making regarding redesigning of the Serbian national subsidy system to include a more refined criteria for regional-based financing.

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Strategic Communications The CSS overall communications goal remains the same – to build awareness around opportunities for Serbia to innovate and increase trade, expand business partnerships, and attract investments. This was successfully done through intensive Project activities and joining of new partners in this quarter. Ac- tivities aimed to position Serbia as a place of innovation in food processing, a delicious food hotspot and a healthy destination continued. This is achieved by sending clear and strong messages created around established activities and repu- table Partners as carriers, and CSS and USAID as supporters. Simultaneously, the Project continues to promote all its activities through CSS communication channels in line with USAID communication and branding strategy. Promotional events with significant in-kind support by the project communications

Event Date CSS Support 60th Anniversary of the In- Nov 29 An informative segment to promote the work of Project-supported partners. stitute for Food Technology and Biochemistry Agriscape 2019 Dec 9-10 Branding visuals, the design of the Serbian stand, in line with the “Serbia Does Qual- ity Food” umbrella message. Serbian Association of Dec 11 Promotional video. Managers (SAM) Annual Awards DCA Press Conference Dec 12 Overall organization of the conference, branding, media and communication with partners. The event drew significant media attention with more than 33 positive media references at the nation-al level including media outlets.

International PR activities

Media study tours

In partnership with Tourist Organization of Serbia, the Project hosted eight German journalists and bloggers from the tourism and food and beverage industries, including Kulinariker, Reisereporter, Express, Stuttgarter Zeitung, Tracks and the City, Escape from Reality, Landmeedchen, Nomyblog, Reiselust-mag and repre- sentative from Mascontour GmbH. The overall idea was to inform the international public about Serbia and its fine food, gastronomic scene and food business events, thereby strengthening the image of Serbia as a food destination, rich in tradition and relatable, humane stories. Participants had a chance to experience the country’s natural and cultural attractions and fine food offerings. During the visit, participants visited Project-supported initiatives, projects and companies exporting F&V products to the EU – dm (where the incubator products were showcased), Belgrade Food Show (particularly Složena zadruga, Šumska Tajna, Bibli, Basket, True Story and Balkan German journalists visiting Agrobel, one of many companies they had on schedule during the visit cheese festival), Agranela (Valjevo), Agrobel (Sopot). The next group of media representatives from Sweden will visit Serbia in the spring of 2020.

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Published articles of UK journalists English journalists that have visited Serbia in September 2019, published articles in Viva Magazine, Wanderlust, Timeout and PA media. The articles have more than 80 pieces of coverage in media (online and print). The combined total number of visitors to online media where the articles were published is over 82 million!

CSS Communication Channels CSS communication channels are already established and recognized as an important source of information for media and industry partners. Individual partners, project models, promotional campaigns and events were highlighted as successful examples of change the project has stimulated in the market. The Project continues to leverage traditional PR and marketing, the best media practice and social networks to promote the Project and its partner organizations. Throughout the quarter, CSS organized and supported numerous activities that were intensively promoted through traditional and online media outlets.

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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. Media support for this period included print (28), online (116), TV (29) and radio (5) appearances – total 178. The sentiment was 100% positive. USAID was mentioned in 149 articles. The most followed topic was BFS, but also PFDH, dm Incubator, Agronet courses, Anniversary of the Institute for Food Technology and Biochemistry and DCA. On social media, Facebook remains our strongest channel on which the public is constantly returning and sharing our activities, with 2,212 new fans this quarter. Facebook page had exceptional results this quarter by 769 shared posts and 73 mentions, with an engagement rate of 4.03% which is considered to be excellent. Twitter engagement rate of 0.9% is good (0.2% to 0.9% are considered to be good). Linked engagement rate of 5.45% is excellent (higher that 2% is considered to be excellent) with 111 shared posts. Detailed statistics is in the table below.

Impressions Engagement Reach Mentions Number of posts Fans Facebook 2,296,017 76,332 1,890,729 73 83 42,512

Impressions Number of clicks Social actions Number of posts Fans LinkedIn 123,691 11,115 1,762 77 2,910

Impressions Engagement Mentions Number of posts Fans Twitter 46,789 658 16 75 364

Impressions Total views Number of posts Fans YouTube 22 9,902 2,016 13

The most influential topics The most popular topics that had the best engagement were success stories on people from the industry, awards, competitions and international promotion of Serbian companies. In the last quarter, most activities and the best engagement were in October (38 posts on Facebook, 37 posts on Twitter and 36 on LinkedIn) promoting mainly Belgrade Food Show. Other successful topics were the ones that promoted various activities related to Project and our partners: companies that entered the Premium Food Design Hub program and dm Incubator, foreign journalists’ gastronomic tours in Serbia, and we would especially highlight the posts related to the success of youth entrepreneurship – CandyMoo team’s promotion of MoCaMela cheese and Lukowa Academie workshops, as they generated a large number of organic reach and had great engagement and results.

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Activities planned for Next Quarter Noteworthy planned activities covering the January 1 – March 31, 2020, period will include:

Access to Markets > Launching the first cycle of integrative business models activity with 5 industry-leading companies (Delta Agrar, Menex, Pureberry, Frutorga, Agrobel); CSS is planning to launch 2 more cycles of this activity (Feb and Apr 2020) for the integration of a large number of F&V producers into value-chains of Serbian lead-exporting companies. Targeted subsectors will be organic berries (frozen), fresh berries, stone fruits and fresh vegetables. The project will focus on the development of VCs in a southern, less-developed part of the country. > In Feb 2020, CSS will close-out 3 work orders of trading partners (Trofej, KoVoli and Agro- Communications) and 2 subcontracts of Premium Food Design hubs (Desing and BIPS). The results will be summarized and reported. > Markets team will actively support the first AgroBelgrade trade show (Jan 30 - Feb 1, 2020): a unique platform for promotion of the Serbian F&V industry. Markets team will facilitate several key conference panels to promote Project activities and business model which lead to better export performance of the industry. > The project will support 13 Serbian companies and PKS/RAS to organize national stand at the FruitLogistica in Berlin (main European/international fresh produce trade show), from Feb 5- 7, 2020. Vojvodina province stand and PKS/RAS national stand will be both branded as “Ser- bia Does Fruit”. > Project is planning to subcontract “Agrobrand” consulting team to promote the Serbian fruit industry in international magazines and assist the Serbian berry/small fruits sector to access the international market through improved marketing and branding. Previously “Agrobrand” assisted in formation of the “Serbia Does Apples” association, which achieved remarkable results within just one year of its existence. > The project is planning to organize a buyers' mission for Egyptian/MENA distributor and explore possibilities with the Serbian Ministry of Agriculture to improve current trade agreement with these attractive markets. > Markets team will initiate the creation of the “Exporters Guide for Fresh F&V” to cover crucial steps and required documentation/procedures to efficiently export to European and other target markets. This guide will primarily serve young Serbian companies, aiming to expand their sales to new markets with specific requirements and procedures (e.g. EU). > The project is planning to engage the consulting team to analyze and develop a market strategy for Serbian fresh and specialty F&V to access the Scandinavian market and subsequently organize a trade mission in Sweden/Finland. > The Project will continue supporting the berry sector in facilitating B2B meetings, organizing study visits and visit distribution centers. It is expected that the new fresh exporting companies will be included in this activity. > The Project will continue supporting members of NASPP in exporting to new markets with special focus on the UK, Poland, and Italy. The team will facilitate the promotion of prune in both local and international markets, through targeted promotional events, B2B meetings and joint presentation of Serbian prune producers. > The Project will work towards upgrading most successfully PFDHs/Incubators to the next stage – institutionalization and commercialization. The Project will work to involve all the key stakeholders: food Hubs/Incubators, Serbian food R&D sector, conventional and alternative sources of finances and BSOs (e.g. government support, RAS voucher system etc.). These activities will eventually lead to the establishment of a sustainable and well-integrated Serbian food-ech ecosystem.

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> The Project will support Serbian Food Technologists Council to assist selected Serbian cooperatives to launch new, healthy and functional F&V food products > Building the capacity of the Union of Cold Storages of Serbia Association by helping identify professional staff that can improve internal management capacities and set up new funding, promotional and marketing strategies for the members. > In partnership with the BSOs (e.g. PKS, industry associations) Project will commence organizational activities to support some of the key international trade events, such as Foodex Japan, Tokyo, Japan 2020 and Fruit Attractions 2020 in Madrid (TBC).

Access to Finance > Continuing work on creating a pool of MSMEs ready to pursue investments in production assets and support access to finance through mentoring, preparation of investment plans and facilitation of contact and application process with selected lending institutions (Banks, MoA, DFS etc.). The pool has been created and revised in close cooperation with consultants contracted under Finance FSA and CSS. Planned issuance of a new work order for one of the existing subcontractors in March/April 2020. In January 2020, CSS will publish a new call for FSA to subcontract 2-3 new consultants in order to expend the reach to new clients and provide technical assistance to companies, cooperatives and individual farmers applying for loans with DCA Guarantee in Addiko, ProCredit and Intesa banks. > Provide technical assistance to companies, cooperatives and individual farmers applying for loans with DCA Guarantee in Addiko, ProCredit and Intesa banks. > Possible work with Divac foundation on the development of alternative revolving fund for financing investments of small farmers in one selected municipality in Serbia. The project would provide funds for fund administration, while the Municipality and Foundation would provide funds. > Directing companies from market activities/hubs/incubators to use alternative investment vehicles like Crowdfunding financing, Erste bank start-up loans, Investment funds if any, strategic partnerships etc.

Workforce Development > AgroNET is preparing its Subcontract Completion Report based on the feedback given by the WKF Team Lead. They will submit it by the end of January 2020. After that, they will start preparing their new proposal (improved course) for 2020. RfP to be developed. AgroNET will have their stand at the Agro Belgrade fair. > UC Davis is preparing its Subcontract Completion Report based on the feedback given by the WKF Team Lead. They will submit it by the end of January 2020. > SAFT is preparing its Grant Completion report (due date January 24th, 2020They are asked to prepare their proposal for 2020, which will be co-financed by the Project and Ministry of Ag- riculture. > The next LUKOWA Académie report is due January 20th. This report should cover Innovation Challenge Day and all activities related to the creation of the Case and students’ prep activities for Challenge Day. The next phase will be the selection of the students for internships that should start in March 2020. > The Project will print 500 copies of the Manual for the implementation of the internship for companies that the YfI experts’ team developed. The Manual will be distributed at the Agro Belgrade fair. > Collaboration with OSU: Letter of Collaboration between Cardno and OSU is expected to be signed in the beginning of 2020. The Project plans to involve Sirogojno company in this collaboration, as they have an idea to establish the Farmer’s college.

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> Agro Belgrade panel: The panel Workforce in Agriculture; will be held on January 31st; WKF TL will be the moderator and the panelist will be: Radivoj Nadlacki – Advisor in the Ministry of Agriculture, Ivan Bakic – HR Manager in Nektar company, Bojana Zizovic – HR business partner in Delta Agrar; Sasa Despotovic – Assistant professor at FoA, SAFT Coordinator and AgroNET Core team member; Itana Miljanic – Youth for Impact Manager; all panelists con- firmed their participation. FoA student Emilija Orsecanin, (at the same time LUKOWA Acadé- mie student and participant at the AgroNET course) expressed her interest to be a volunteer at the Agro Belgrade fair.

Strategic Communications > Following further APSF development – finalization of operational and organizational docu- ments, annual assessment plan, functioning according to the agreed business model and organizational structure > BFS 2019 evaluation and reporting; BFS 2020 recommendations and planning > AgroBelgrade promotional support and the last phase of a media campaign (January 2020); follow up and evaluation of the event > International PR activities – final preparation and realization of a third media study tour from Sweden (March 2020); follow up of German visit > Svet hoce domace/ World wants homemade platform (SHD) further development and strategic plan for 2020 > Preparing and planning of Country branding project – focus, partners and stakeholders deter- mination; preparatory activities on the strategy development > Promotional support to partners and Project activities (Fruitlogistica, SAM mentorship program, Serbia Does Apples Association, Lukowa, Desing, hub&spoke, dm Inkubator, and PFDH program follow up, etc.) through support in SM campaigns, PR, promotional materials and organization of the events. > CSS Communication channels further maintenance and development

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Annex A: PMP Table No Data Collection Schedule of Baseline Targets Actuals Indicator Type and Unit Method collection Purpose: Eliminate obstacles to Serbian competitiveness in order 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 Custom / Outcome Survey Annual 2.56% Y1: +0% firms impacted by USG-funded as- Percentage (median 2015-2017 Y2: +4% Y2: +10% sistance sales growth of the Y3: +8% Y – Calendar Year 101 companies from Y4: +11% the baseline survey) LOP: +25% Description: The firms that will receive CSS support have been 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. CSS assumes the regulatory environment remains constant, currency exchange remains steady, and no significant weather occurrences negatively influence production. CSS targets represent percentages points of 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”). 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 Standard / Output Activity Records Quarterly 0 Y1: 20 Y1: 21 receiving USG-funded technical as- Y2: 35 Y2: 147 (new firms) sistance to export (EG 2.2-1) Y – Program Year Y3: 55 Y3Q2: 88 (new firms) Y4: 80 LOP: 190 Total: 256 Description: The Y1-Y2 targets were established based on a projected reach of initial activities in engaging these firms. Subsequent annual growth of this target is 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. 1-2 Number of private sector firms that Standard / Outcome Survey Annual 0 Y1: 20 Y1: 29 have improved management prac- (medium) Y2: 30 Y2: 77 (new firms) tices or technologies as a result of Y3: 45 USG assistance (EG.5.2-2) Y – Calendar Year Y4: 60 LOP: 155 Total: 106 Description: 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 project interventions. The Y2 target is expected to be exceeded as the project had interventions in the Y2 that attracted more companies than initially expected – most notable the Belgrade Food Show trade fair, a single event that attracted 73 SMEs. CSS will propose new dynamics for the Y3 and Y4 targets with the Y2 Annual Reports. 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 Y3: 25 Y3Q3: 137 buyers Y4: 35 LOP: 80 Total: 263

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No Data Collection Schedule of Baseline Targets Actuals Indicator Type and Unit Method collection 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 relate to executing sales, receiving consulting assistance, or buying new technologies from a) firms in export markets or b) retail chain/HORECA in domestic markets. These values are determined both by CSS activity records from direct communications with project partners, and through the Annual survey. 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 Y1: +0 from the baseline Y2: +4 Y2: +6 Y – Calendar Year survey) Y3: +4 Y4: +5 LOP: +13 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. Maximal value of the index is 100 points (4 * 25). Baseline was determined 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 were initially set to increase LOP by 13 index points. 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 se- Custom / Outcome (low) Survey Annual 48% Y1: +0% lected value chains using external Y2: +4% Y2: 0% sources of finance Y3: +3% Y4: +3% LOP: +10% Description: Based on the baseline figure of 48% of firms already utilizing external sources of finance in 2016 (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 rela- tively steady domestic lending market and an increase in investment opportunities, partially due to the project, beyond lending. The original target was to increase the percentage of the F&V firms using external sources of finance by 10 percentage points. 3-2 Value of new private Custom / Outcome Survey, Annual, 0 Y1: 0 Y1: 0 sector capital investment in tar- (high) Activity Records Quarterly Y2: 0 Y2: $507,400 geted value chains leveraged Y3: $10M Y3Q3: $1,888,185 through USAID Y4: $10M LOP: $20M Total: 2,395,585 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 training SME support programs with banks, technology exposure missions and new contracts, and the possible creation of an SME fund will lead to increased capital investments in the industry. The investments will likely start to realize in later years of the project and CSS has established a LOP target of USD 20 million, considering that 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.

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Annex B: Progress against Year 3 Workplan

Interventions and Tasks, Partners, Outputs, and Status Access to Markets # Intervention Partner Output Period Status Access to Market for Fresh, Frozen and Specialty F&V Sector I1-3 Export facilitation partners Finding the best fitting retail-ready F&V products for neighboring CEFTA markets Closing out Retail-ready products to CEFTA Trofej (Croatia, Slovenia, and Macedonia), as well as the USA and Australia – targeting Feb -Dec Feb 2020 diaspora. Open online sales channels internationally for the most attractive Serbian spe- Serbian specialty food access to Closing out Ko-Voli cialty products. These platforms are international online sales platforms, like Am- Feb-Dec online platforms Feb 2020 azon.com, as well as country-specific sites (foodist.de, igourmet.com, etc.) Serbian high-value food in Ger- Agro-communi- Target healthy/specialty/functional and gourmet food chains in Germany and Closing out Feb-Dec man markets cations Austria. Samples of selected SMEs delivered to potential foreign buyers. Feb 2020 Educating and integrating the VC of farmers and SMEs, producers of berry and Assisting Serbian Value Chains other F&V, and organizing logistics/exporting procedures to export fresh produce Completed to Export Fresh F&V to EU mar- Dotika Feb-Oct for retail and wholesale markets F&Vs to buyers/distributors in Germany and Dec 2019 kets Austria. I2-3 Industry Associations (building capacity of the existing I2-3; development of the new I2-4) I2-4 The project will work in Y3 with SDA to strengthen the subsector and transfer positive experiences to other subsectors (e.g. fresh berries,). In 2019, SDA is planning Serbia Does to increase its managerial, marketing and analytical capacities; attract new mem- Capacity building of apple in- Closing out Apples asso- bers to join the business association; educate and integrate co-operatives – Mar 19-Feb 20 dustry association Feb 2020 ciation (Fresh) smaller apple/pear producers; and penetrate new markets such as Romania and Gulf Countries. Correspondingly, SDA is planning to organize B2Bs and/or attend trade shows to cover these markets. 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 byers field visits conducted in June (Derby Ingredients and Whitworths) Website for NAPP developed Finished Increasing export in the retail sector in selected international markets, in order 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 technology/capacity building study tour and organize a visit of the international buyer(s) in Serbia.

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Access to Markets # Intervention Partner Output Period Status Capacity building of t Serbian (Frozen) Capacity building of ACS; Association of Cold Storages Planned (ACS) Capacity building of Serbia Or- Increasing visibility of the Serbia Organica Association and raising awareness ganica (Specialty) about the benefits of organic production among consumers; Collection and provision of information related to organic production and producers in Serbia. Apr-Jun Completed Website developed; promotional activities conducted Database of organic producers developed and functional Catalogues and brochures prepared and disseminated Business Support Systems Coordination Strengthened I2-8 Industry Lead Companies as Market Integrators Engage an Industry leader to educate 240 farmers on modern gherkins production; integrate 150 farmers to produce gherkins; provide advisory service on total 20 ha of gherkins production. RZ Agro (Fresh) ILC Apr-Sep Completed Introduce new berry variety. Improve quality of exported F&V (gherkins). Introduce new business model for small farms. Engage an experienced team of specialist for fresh F&V logistics, organization, Nov 18- Feb 20 trade, and implementation of (quality/safety) standards to capacitate at least 4

Fresh Berry Industry Grouping firms to trade effectively with organized EU distribution systems. This activity will ILCs Ongoing (Fresh) potentially lead to fresh berry specially association.

Assistance in export and logistics and quality standards implementation provided Apr-Jun to 3 companies, 2 companies exported to EU (Greenyard/Albert Heijn) Export-led growth through or- ILC Increase sales and export volumes in organic PL through the implementation of ganic certification and strength- organic standards in fruit processing and production, and better integration with ening of Serbia`s organic fruit international markets; Apr-Jun Ongoing producers` 2 rounds of trainings for producers conducted B2B meetings with foreign byers conducted Sirogojno Co ILC Educate program for SMEs and farmers in their supply chain to increase Dec 18- Dec 19 knowledge-base regarding contemporary production practices and food safety Completed standards/certification, grades & standards. Food safety system of the VC will be straightened through newly established laboratory and procedures. Lukowa Education for growers ILC Cooperation with 110 new growers obtained goods in the amount of 760.000 USD Dec 18- Apr 19 NOTE: The data above is from September 2019 so it is mentioned in Q2

Completed

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Access to Markets # Intervention Partner Output Period Status I1-5 Business Support Services: Hubs and Incubators Premium Food Design Hub Hubs Successfully organized 3-month booth camp, with series of trainings, workshops Apr 19- Jan 20 (PFDH) 2019 established (Cycle 2) and individual mentoring sessions in 4 core fields: food technology, packaging design, access to market and access to finance. DTC team has provided 2 joint To be completed Feb workshops and a total number of 43 individual trainings to beneficiary companies 2020 21 in food technology, access to market 13, and access to finance: 9). BIPs Food Hub had organized 3 group food safety trainings and over 60 individual support sessions. DM Incubator DM, RAS, Support to 18 food and beauty and cosmetic producers to place new innovative Sep 18 – Sep Serbia Organ- products in DM’s retail network of 97 stores in Serbia and potentially south-east 19 ica, and central Europe. Out of the 57 developed products, 46 are already on dm’s Faculty of Ap- shelves and the remaining 9 will be launched in October 2019. Furthermore, 28 plied Arts Bel- were cosmetical while 29 were from food assortment segment which proved our Completed grade domestic producers’ ideas quality in both assortment areas. Dm drogeriemarkt plans, after a reasonable timeframe (expected 6-9 months) of sales on the shelves, to offer the products to other dm countries where it operates, based on their sales results performance. Private Label Training Centre for ENECA Selected 10 SMEs and 1 cooperative, with significant market potential in PL mar- Apr 19- Feb 20 companies ket segment, have entered the PL boot camp. During the boot camp, all selected SMEs and cooperatives will receive a comprehensive product and business sup- Ongoing port about PL market access and potentials, food safety and technology, and access to finance.

I1-6 Development of Innovative / Integrative Business Models and Services CSS has signed a grant agreement with Serbian Food Technology Council (SFTC) Development of technology trans- for Development of technology transfer and innovations support network in August fer and innovations support net- August 2019 - Ongoing SFTC 2019. SFTC will help create a tailored zero-waste model and develop innovative work February 20 ways to transform food production waste into new, innovative, shelf-ready prod-

ucts. Six companies and four cooperatives will benefit from the activity.

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Workforce development

# Intervention Partner Output Period Status Educational system improvement I2-5 Work with academia on the development of short-term innovative certification courses UC Davis and AgroNET de- UC Davis, Certification course Feb 19- Dec velop short-term innovative AgroNET 19 Completed certification courses

UC Davis, UC Davis input in the development of the industry survey provided to AgroNET; Apr-Jun Industry survey and Needs As- AgroNET Industry survey/Company needs assessment questionnaire finalized and sent to sessment of the companies selected companies Companies responses collected and analyzed by AgroNET Completed UC Davis Feedback on the AgroNET analyses of the survey results

UC Davis Field visit to Serbia UC Davis, Visit to selected industry facilities Apr-Jul and realization of the workshop AgroNET Workshop held: Sample course presentation done and feedback on teaching with AgroNET methods and content exchanged between UC Davis and AgroNET Completed AgroNET website created and started

Study visit to California UC Davis, Study Tour Jun-Jul AgroNET Evaluation and feedback of the Study visit submitted by AgroNET Completed

Pilot course development UC Davis, Concept of the Pilot course defined (theme, lecturers, teaching methods, adver- Jun-Oct AgroNET tising tools) Final Recommendations on the pilot course curricula created and submitted by UC Davis Final Pilot course content/modules developed (theoretical and practical part) in- Completed corporated lessons learned/know how from the study visit Pilot course advertised to the Serbian Companies; Participants selected for the pilot course & List of the selected course participants submitted; Pilot course implementation AgroNET Implementation of the first pilot course conducted with UC Davis assistance; Oct-Dec 36 participants from companies trained in export/marketing & new technological Completed practices Field visit to industry facilities for all course participants organized;

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Workforce development

# Intervention Partner Output Period Status Evaluation of courses submit- UC Davis, Evaluation and final recommendations submitted by UC Davis & AgroNET Dec 2019 – ted and preparation for the next AgroNET Jan 2020 Ongoing cycle done I2-10 Work with companies on developing new educational models I2-10.1 LUKOWA Académie 2018/19 LUKOWA, FON Realization of the internship program (continuing from 2018) and scaling up the Oct 18-May 19 model for 2019/20 Lukowa Académie contributed to the company’s capacity building; Completed As a result of the program 2018/19: 5 students hired; 5 students admitted to the internship;

LUKOWA Académie 2019/20 LUKOWA In collaboration with Faculties create an educational program to equip students Ongoing with new knowledge and skills needed for the job in the processing industry Workplan for 2019/20 Acadé- LUKOWA Improved curricula for a new cycle of LUKOWA Académie finalized; Aug-Oct 19 mie developed Lessons learned from last year incorporated in the new plan; Completed Teaching materials prepared Realization of the internship LUKOWA Selection of students for the internship program; Oct 19-June program CASE Study Competition Challenge implementation; 20 Ongoing Selection of the candidates for Internship finalized; Report on conducted internships I2-10.3 Education improvement Sirogojno The idea to be developed with the partner; it requires identification of the educa- TBD through the development of tional institution that is interested to participate in this partnership; subcontract

an extension program for signed with the leading partner in this activity. Possible cooperation with US edu- farmers cation institution for knowledge transfer Stimulating youth participation in the industry I2-11a Developing sustainable tai- Youth for Impact Selected companies provide internships for 12 students; 6 companies developed Aug 18- Oct 19 lor-made Internship model capacities of mentors and developed new positions for young people; for the food processing in- 3 out of 12 students got the employment; Completed dustry Students who finished LUKOWA Académie got involved in Internship within YFI project

Next cycle of the Internship Center for Ca- Center for Career development starts offering sustainable Internship model de- program reer develop- veloped in 2018 and offers it to new companies (that didn’t participate in the pro- Planned ment/YfI ject)

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Access to Finance

# Intervention Partner Output Period Status I3-1 Financial trainings for SMEs ACDE, BDO, 60 SMEs from selected value chain trained; 2019 Ongoing to stimulated demand for fi- Sim Cert 20 companies ready to immediately perform tangible investment based on nance the completed business/investment plan Y3: $10 million of tangible investment

I3-1.3 The working plan produced for ACDE, BDO, Revised strategy doc TBD TBD further financial trainings of Sim Cert Performance fee model SMEs/ selected value chain based on follow up from Q1-Y3 and methodology provided

I3-3 Possible mobilization of an WMEP 1 company to receive eq. financing from the moment of eq. fund establish- SME fund with focus ag-pro- ment Cancelled cessing sector 3 companies to receive eq. financing during LOP Cancelled I3-4 Support USAID Mission to es- ProCredit bank tablish a credit guarantee Addiko bank Facilitate the signing of DCA and based on that provide TA to banks and com- 2019 Ongoing panies from the industry as described in previous sections in order to ensure utilization of the guarantee for the development of underserved region/clients I3-5 Working with MOA on devel- MOA Detail analysis of Serbian potential for investment in the food processing industry oping a new approach to at- based on the region specificity/potential for development F&V industry 2020 Ongoing tract FDI based on the results from Agriscape 2019 I3-5.2 Investment conference – MoA / RAS / Increased number of investors willing to invest in the food processing industry Agriscape of similar event BDO Dec 2019 Ongoing

I3-7 Working with individual Consultants - Increased number of firms investing in modern processing technology or 2019 Ongoing Investors and / SEVEN, TBD investors willing to invest in the food processing industry Investment funds Investment fund - TBD

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Communication and Branding

Intervention Partner Output Period Status I2-4 New industry associations formed and functional

I2-4.1 Strengthening and Development APSF APSF development and activities planning (finalization of operational and organi- Oct-Dec Ongoing of Serbian Food Promotion As- zational docs, annual assessment plan) sociation (APSF) I2-2 High-profile international food event organized in Serbia I2-2.1 Organize Belgrade Food Show APSF Belgrade Food Show gathered 114 Serbian and regional exhibitors, 57 Serbian Oct, 10-11 Completed and international buyers, more then 215 meetings held in B2B zone, 67 speakers and panelists at 17 sessions. 5 companies participated in investment pitching sessions with 9 investors, followed by 19 B2B meetings (6 investors were interested in further negotiations with 8 companies). I2-4.2 Svet Hoce domace promotional APSF 63 new companies participated in educational sessions (during BFS and in follow Oct-Dec Ongoing and educational platform up period). SM channels results – 26.274 FB funs (2.467 new page likes), 5.241 Instagram followers (482 new followers) Promotional videos produced; Educational sessions conducted I2-4.3 Demo day – a business event APSF Demo day as a separate business event is cancelled. Oct, 10-11 Completed with a focus on HoReCa and re- According to the arrangement with APSF, activities focused on retail and tail HoReCa integrated with BFS program. I2-12 Promotional platform and plan for joined activities with TOS established I2- Study press tours from targeted TOS Relationships with media from targeted markets built; 1st tour of UK journalists Oct, 8-12 Ongoing 12.1. markets arranged hosted in Sept. 2nd with German journalists in Oct. UK visit results: more than 80 pieces of coverage in media (online and print). The combined total number of visitors of online media where the article is published is over 82 million.

I2- Country Branding Campaigns TOS (GOV), Country Branding strategy and campaigns – preliminary meeting with nation Mach 2020 – Planning/Ongoing 12.2. APSF, CSS brand expert April 2021 I2- ITQi International Taste Institute Digital Drive, Participation of the iTQi representatives at BFS – edu sessions and presenta- Oct, 10-11 Completed 12.10 participation at BFS APSF tions, 1:1 taste testing and consultative session

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Annex C: CSS Grants and Subcontracts Grants and subcontracts are an important tool for building key partnerships and networks that were utilized by USAID CSS in early stages of the project. Two grants in the amount of $40,577 were awarded and signed in this reporting period of Y3 Q3.

Award of grants Since the inception of the project, USAID CSS awarded 29 grants to 24 organizations/companies in total value of $912,680.54 (the total obligated amount due to grant agreement modifications and cancellation).

Annual Program Statement USAID CSS published the Annual Program Statement (APS) 2019, on October 25, to continue establishing integrated and collaborative models for supporting Serbia’s processing industry to increase export of fruit and vegetable products. The purpose of the APS is 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 industry; 2) Trade promotion – Improving trade and export service for industry firms; and, 3) Services Innovation – New products, practices and/or partnership development. In general, the Project awards the most successful bidders with contracts worth between $8,000 and $40,000. Throughout the quarter, on a rolling basis, the Project evaluated applications submitted in re- sponse to APS as they were received. To date, three companies and one association applied. Following an internal evaluation process and after receiving USAID approval, two companies were awarded grants in total value of $40,577. o Lukowa d.o.o. – The purpose of the grant is to establish a long-term sustainable educational program, specifically focused on addressing human resources needs of export-oriented food processing companies in Serbia, thereby capacitating small and medium companies (SME’s) to generate export-led growth in new international markets. The total value of the contract is $17,000 to be implemented over seven-month period. o Top Events Team d.o.o. - The purpose of this grant is to increase awareness of fruits and vegetables (F&V) companies on importance of harmonizing the production with international market needs and better understanding of opportunities for global market access. The project will contribute to increasing fruit production in line with global market demands, thus boosting the export of Serbian fruits in international markets. This will be achieved by organizing the “International conference Agro Belgrade” to present the benefits of internationally recognized production standards and certification processes, as well as to link micro-firms and small holders with large distributors and retail chains. The total value of the contract is $23,577 to be implemented over four-month period.

Project received one more application to APS-2019-01 during this reporting period. The application was submitted by Cold Storages Association of Serbia on October 30, 2019, approved by Grants Evaluation Committee in December 2019 and is currently in the process of contracting. The project activity aims to support the consolidation of the cold storage industry through

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Association`s capacity building, including management, know-how exchange across the industry, improvement of communication between smaller and bigger companies, improvement of harvesting models and cooperation in international markets.

All grantees have been regularly fulfilling the contracted obligations, and therefore 9 (nine) payments were realized in the reporting period for accomplishment of milestones as per their grant agreements.

Total disbursed grants funds until December 31, 2019 amounts to USD $826,737.43 ($85,786.84 in this reporting period).

Grants Close-out Since the inception of the project, CSS closed 19 grants (eleven within APS-2018-01 with one cancelled at the very beginning of implementation of the grant project), with a total value of $657,885.68. Project maintains rigorous monitoring and evaluation of grant performance to ensure grant recipients are fulfilling the terms of the agreement. If grantees are underperform- ing, the Project takes corrective action to ensure value for money and project objectives are being met.

Status and award of subcontracts Since the inception of the project, CSS awarded 68 entities using various contracting vehicles (Subcontracts, Purchase Orders, Service Agreements and Small Value Purchase Orders) The total amount awarded is USD $1,409,083.26, while the total disbursed subcontract funds until December 31, 2019 amounts to USD $1,156,588.85. In the reporting period Y3 Q3, the awarded amount is USD $71,445, while the disbursed amount is USD$ 198,502.99 as presented in detail in the table below:

Table C1: Total Agreements Awarded and Disbursed over the Project Type of Contract Awarded Awarded amount Y3 Disbursed amount – to- Disbursed amount Y3 amount -total Q3 tal Q3 Subcontracts $790,378.50 $56,595.00 $598,156.72 $129,272.99 Purchase Orders $355,059.61 $9,950.00 $328,189.63 $30,950.00 Service Agree- $239,576.00 $0.00 $210,466.01 $33,006.00 ments Small Value Pur- $24,069.15 $4,900.00 $19,776.49 $5,274.00 chase Orders Total $1,409,083.26 $71,445.00 $1,156,588.85 $198,502.99 Subcontracts, Purchase Orders and Service Agreements Awarded During the reporting period (Y3 /Q3), two(2) Subcontracts, one (1) Purchase Order, and one (1) Small Value Purchase Orders have been awarded. Subcontracts awarded: ✓ BDO Business Advisory d.o.o. was awarded the Work Order No.2 for providing service “Assistance to Serbian companies’ participation at the high-level international investment event Agriscape 2019- Financial Advisory and Promotional Material Design”. This task is

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a part of the Scope of Work of the existing Framework Service Agreement entitled: “Facil- itating access to finance for Serbian Micro, Small and Medium Enterprises (MSME) Oper- ating in Fruit and Vegetables Processing Sector” (FSA) No. USAID CSS-2019-3/BDO concluded between Cardno Emerging Markets USA, Ltd., Washington DC, Belgrade Rep- resentative Office and BDO Business Advisory d.o.o., and represents successful utilization of the multi-award framework mechanism deployed by the Project during 2019. The purpose of this task was to assist the Serbian agribusiness sector to attract new Foreign and Domestic Investments (FDIs), at Agriscape, a high-level international investment event, particularly dedicated to making agricultural assets available to foreign investments. This event represents a strong platform where Serbia can present its advantages as a country for agricultural production, food processing, trade and distribution. ✓ Frutorga d.o.o. was awarded a Subcontract as a result of the competitive multi-award pro- curement process for service entitled “Improvement of Fruit and Vegetables Value-Chains through Integrative Business Models”. The purpose of this activity is to support aggregative business models (i.e. forms of contract farming), particularly in underdeveloped parts of Serbia, aiming to create opportunities for larger groups of farmers/producers to access high- standard domestic and international markets and efficiently utilize inputs, know-how and new technologies. Frutorga is one of five (5) awardees that will work on improving and expanding their cooperants’ network capacities, thus enabling increased export and sales within Frutorga’s Scope of Work particularly focused on the fresh berry, stone fruits, and frozen organic fruits. Purchase Orders awarded: ✓ SEEDEV d.o.o. has been awarded a Purchase Order to conduct the analysis of the 10 (ten) most important agricultural products and prepare the study based on the findings. The goal is to provide all market participants, as well as general public, with high-quality information regarding forecasted prices of the most important agricultural products at the local market in a short period of time (6-12 months), so that the stakeholders would learn about the market movements in their region, but also at the relevant markets, which could influence the quality of the decision-making process. Through this activity the Project supports the efforts of the Government of Serbia (GoS), particularly the Ministry of Agriculture (MoA), aimed to provide improved statistical information to the agricultural market stakeholders with the goal of better planning, production, improved sales processes and ultimately export increase.

Small Value Purchase Order awarded: ✓ Darko Jakšić PR Consulting wine research has been awarded a small value Purchase Or- der to conduct an initial analysis of the wine sector in Serbia and prepare a brief study based on the findings. Wine segment is a natural fit to Project activities under the specialty food segment which have a strong branding and marketing component, where Serbia is internationally and domestically being positioned as a country of sunny weather, pristine nature, and delicious food and wine. Thus, the focus under the wine segment is placed on promotion of unique and autochthonous varieties, and close cooperation with the Government of Serbia (GoS) to support these efforts. Wine, as a part of these market systems-oriented activities, should see an increase in exports and investments in the industry.

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Table C2: Ongoing Solicitations USAID CSS So- Title Issuance Closing Status Expected number licitation No. date date of awardees RFP-2019-08 Improvement of Fruit and August 27, September Subcontracting Five (5) awards is- Vegetables Value-Chains 2019 30, 2019 in progress sued through Integrative Business Models RFP-2019-09 National Wholesale Market - TBD TBD RFP in prepa- One (1) award Preliminary Study ration RFP-2019-10 Framework Service Agree- TBD TBD RFP in prepa- Three (3) awards ment- 2 Facilitating access to ration finance for Serbian Micro, Small and Medium Enter- prises (MSME) Operating in Fruit and Vegetables Pro- cessing Sector RfQ 2019-18 Integration with the Interna- November December Subcontracting One (1) award is- tional Markets in Fresh, Fro- 20, 2019 11, 2019 in progress sued zen and Dried Fruit Sectors RfQ 2019-20 Access to Nordic Market for TBD TBD RFP in prepa- One (1) award Serbian Fresh and Premium ration Fruits and Vegetable Prod- ucts

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Annex D: Quarterly Self-Assessment on Progress In this quarter of Y3, all CSS interventions have been consistent with the following set forth principles: > Focus on root causes > Facilitate change through the local system > Let local partners lead and self-select > Leverage local resources Focus on root causes: Access to markets activities continue harness and monitor ecosystems developed by lead firms, hubs and traders, looking for ways to expand their operations and expand them through engagement of additional market systems. This will continue to address the problem of integration between growers and exporters as well as build capacity of firms to work with EU markets, transferring know-how and new technologies into Serbian economy. New round of lead firms has been included in the project, highlighted by engagement of Delta Agrar to dramatically expand its network of progressive farmers and cooperatives and expand production of high-value, intensive production vegetables. Blueberry exporters are expanding into other crops trade and this is also supported by the project during this quarter. Finally, extensive talks have been held with government that they adopt a hub-type approach to assisting firms – creating programs that will integrate a variety of services for firms instead of providing them with capital subsidy only, addressing the gap in connection between GOS and private sector. CSS will work with RAS to implement these activities in 2020. This same principal was applied by MoA and UC Davis for the first time with professional certification courses for the industry this year. CSS will look to expand on positive elements of these activity in 2020. Facilitate change through the local system: CSS works through the local stakeholders when- ever possible, embedding the capacity building in the relationships. One of the best examples of CSS application of this principle is the upcoming Agro Belgrade, fashioned and modeled after BFS. CSS worked extensively with a number of local stakeholders to set the trade fair up, utilizing partners from existing activities as well as other from the ecosystem that have been associated with the project. Let local partners self-select: In this quarter, the project noticed that the new partners that the project has engaged have approached the project directly, having learned of other activities and project successes. Through direct implementation, project partners continue to select partners on the ground that are ready to respond to market needs developing resilient, locally owned networks. Leverage local resources: CSS has leveraged local resources in a variety of ways. All service providers in this quarter are local firms –5 subcontract, purchase order, service agreements, and 2 grants were signed with 7 local organizations and consultants. All grantees participated with direct cost share, creating a sense of ownership with the recipient to prioritize the sustainability of the intervention, extending its impact and maximizing its purpose.

Collaboration Learning and Adaptation The Year 3 Mid-Term CSS CLA event took place from December 16-18 in Vrsac. It was attended by the CSS team, the USAID COR and project partners. The CLA event provided a discussion and learning opportunity for CSS staff to reflect on activities undertaken since the last year and helped CSS staff to collectively agree upon appropriate actions needed to adapt project activities and provided a solid base for preparation of the next work-planning session

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scheduled in January 2020, which will serve to set the strategic direction for the Project in Year 4. For this occasion, Project invited ten main project partners4, and gave them an opportunity to discuss their roles and retrospect on the activities they participated during the last two and a half years, and provide feedback as well as suggest ideas for going forward. The Year 3 mid-term CLA event was particularly important as we evaluated the efforts invested in refocused activities that we deemed will have the highest promise for success, and see if those premises still hold. The discussion with team members and partners with whom we have been working on implementing strategic goals informed our decisions on refining the activities and proposing adaptive measures to achieve maximum results and ensure long term sustainability of systemic solutions and developed business models to support the F&V processing industry and explore the possibilities for its replication to other value chains. This brainstorming discussion provided the groundwork for the work-planning for Year 4 of the Project implementation. Each team prepared a presentation of current activities through systemic change processes (adopt, adapt, expand and respond framework), goals and outcomes in order to test the theory of change and reflect the desired future outcome of the activity. The expected output of the event has been an agreement on redefining the project strategy when necessary, in consultations with our partners, which will be used as a guide for developing a focused Y4 work plan. The following are the summary of the key findings of the Project’s main programmatic activities. • Sustainability: The project needs to focus only on the activities that will be realistically sustainable, and most importantly, will 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 on-going ones, and monitoring (and stimulating where needed) crowding-in of market stakeholders around successful project interventions. • Industry Leader Companies (ILCs) models show the way forward – how will the rest adopt? We expect well-established ILC (market integrators) to successfully develop in different regions and agribusinesses. ILCs can share information with local communities, extension ser-vices and mobilize them to assist farmers in sustainable manner. Good examples: Sirogojno laboratory; Lukowa started attracting vegetable growers and exporting frozen vegetables; Fortis strengthened their VC with newly ed- ucated organic suppliers and produced new retail product. Based on the experiences from existing pilots, the Project will seek additional partners/ILs who will raise the bar in industry performance by implementing IT solutions and agro-technological advance- ments to increase production value, quality and traceability. Simultaneously, a partner for disseminating lessons learned and standardizing IL approach will be identified - the project will seek a partnership/activities with other stakeholders that can adopt/replicate this approach, such as PKS, Union of Cold Storage or through knowledge sharing platforms such as conferences or trade fairs. • Fresh berry market segment focus. The companies engaged in CSS activities have strengthen its VCs, exporting more and thus adaptation and adoption cycle was successfully completed. To achieve replication of successes of this approach to other firms in this market segment the plan is to transfer knowledge through platforms (through ILC, demo plots, trade shows AgroBelgrade, FruitNet, etc); more companies from

4 MoA, PKS, Serbia Does Apple, APSF, AgroNet/SAFT, Dotika, Brestovik, Fortis, Sim-Cert and DNA

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southern Serbia to follow the example of Brestovik, Pureberry and AgroBel in implementing quality standards, buying equipment machines or looking to become a member of VC, adapt new varieties, invest in demo plots; The main challenge is building trust between export companies to leverage their resources and continue cooperation with each other. Export companies should work together to provide market intelligence services, promote partnerships in logistics/packing/distribution and help each other sell retail-ready berry products through Greenyard and other large EU buyers. Since most of the fresh F&V exporters are not ready to join any formal organization or association the Project will continue supporting companies individually (through RFP/consultants) while encouraging them to work with each other. • Specialty food segment benefits from working with traders – what next? Traders are a traditional tool in facilitating the international trade; but extending their services with trainings and product improvement services for firms is novel feature the CSS supported. Traders are operating on commercial terms and they have provided services for the companies on an individual base. Development of the trader sector in the specialty food segment and increasing connections with micro and small Serbian firms has found a natural sustainably and scale up home in Belgrade Food Show (BFS). BFS is seen as a great integrating platform for traders and specialty food companies. In this context CSS partner in organizing BFS, Association for Promotion of Serbian Food (APSF) also must be further strengthened to mobilize companies from this the specialty food sector and provide key services to them in marketing and promotion. APSF must consider growing trends in the EU and clearly define its strategy so selection of companies and purpose of the next BFS are clear. CSS will extend this activity to foreign based trade agents experienced in development of go-to-market strategies, education and establishment of direct connections with retailers, importers and distributors in selected markets (EU, Mid-East). These agents will work closely with APSF representatives in capacity building of their internationalization knowledge and creation of network of potential buyers in selected markets. • Food hubs have produced immediate results – how does it become a business model? The model has received strong recognition from the rest of the industry (DM replicated the model with the DM incubator); This service is essential for early-stage businesses to gain knowledge and expertise in order to further develop their innovative products and place them on the market. Moreover, this model has been replicated twice in late stages (ENECA PL Trainings Center and Serbian Food Technology Council zero-waste model and services). For sustainability of food hubs, CSS is working towards institutionalization of support to food community through tailored-made RAS financial incentives program to expansion of fast-growing SMEs on international markets. RAS will develop support pack-age for food businesses internationalization that could cover up to 50% of total cost for different go-to-market activities (certification, re-development of products in accordance with foreign market food safety regulations – technology, packaging and labeling, participation at b2bs, trade mission and study tours, etc.). Moreover, RAS will conduct in-depth business assessment and provide additional comprehensive training and mentoring support to fast-growing SMEs in food industry. • Workforce development programs generating positive developments. The new In- ternship Program implemented by Youth for Impact will be evaluated following the completed cycle (the end of 2019) and adjustments will be made to the model based on this feedback. CSS will support promotional activities that would attract more companies to start implementing developed internship model. Focus in the Year 2 and 3 was developing collaboration between UC Davis and local partners (FoA & AgroNET) and

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successful launch of the first professional certification course in December 2019. There were several learning points gained so far: firstly, Serbian Universities not experienced in international projects implementation; need to establish stronger links with the industry (ie. creating the database of the companies); develop strategy how to motivate companies to pay for the course (seeing a value & benefit in it) as currently only a small participation fee was charged. AgroNET is expected to build capacities in fund-raising and applying in other sources of funding from EU & other donors, so the Project can exit in 2021. Private sector-Academia Partnership Models CSS plans to invest some time in promoting the LUKOWA Académie model by organizing the presentation for other industry leaders & partners at future project-supported events. Lukowa envision this Academy as long-lasting program, broadening its curriculum and becoming commercial (future students paying tuition fee). For the Ecotrophelia the project will facilitate its partners (APSF, SAFT, food hubs) to be more involved in future student competitions. • Industry associations activities to remain flexible. Working with industry associations remains a key component of the Project’s strategic interventions, but only select efforts with willing partners are supported. After Serbia Does Apples success proved that professional industry association can be excellent vehicle for the industry to access new markets the Project goal is to replicate the success to other branches. The main success is that Serbia is getting recognized among EU buyers as relevant and reliable partner. National Association of Prune Producers Support is adapting toward sustainability. It should support promotion of the Stanley prune variety in the international market (possibly UK, Germany, Poland, Egypt, MNA;) with a distributor or international buyer, marketing Serbian prunes different from other dried plums - as a nutritive product, with less sugar and higher fiber content. Serbian Union of Cold Storages is undergoing a key management change, the Project plans to assist building the capacity by identifying professional staff that can improve internal management capacities and set up new funding, promotional and marketing strategies for the members, as well as transfer knowledge to the rest of the industry about ILCs model successes. • Finance activities to shift focus on practical services to SMEs. CSS should continue Investment related Technical Assistance to MSMEs focusing on investment related Mentoring, Preparation of Business Plan and matchmaking with source of funding. Pro- vide Technical assistance to clients (MSMEs, farmers, cooperatives) applying for loans with DCA. Increase Promotion and visibility of service through social media and public events. CSS introduced innovative approach to attracting equity investments in F&V Industry by organizing 1st peaching session for companies and investors from food processing industry at the BFS. Model is transferred to another similar investment/food events. The project will explore new joint ventures/greenfield investments to support SME growth and/or opening new markets. • Project communication continue to promote successful market models, not individual companies.

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