Global and Local Raspberry Supply Chains: National-level Report of Serbia

Zaklina Stojanovic, Biljana Jovanovic Gavrilovic,Dragan Loncar, Irena Jankovic,Bojan Ristic, Mirjana Gligoric

Faculty of Economics, University of Belgrade, 2015.

2015

GLAMUR is a EU FP7 project that aims at integrating advancement in scientific knowledge about the impact of food chains to practice, to increase food chains sustainability through public policies and private strategies. This general objective will be pursued through the following specific objectives: • To develop and validate a performance criteria matrix for assessment and comparison of food chains operating at a range of geographical scales through analysis of how food chain impacts are communicated in different spheres of society. • To build a database of quantifiable indicators of impact and a set of 20 case studies aimed at understanding how impacts are generated within specific food chains. • To advance knowledge on methodological problems and trade-offs arising when measuring and comparing the impact of food chains within and between sectors. • To assess how performance is perceived by stakeholders in different national contexts through participatory assessment and multi-criteria analysis of the different typologies of food chains. • To assess the actual and potential role of public and private policies addressing food chains and to turn assessment into policy recommendations. • To build a network that turns the advancement of scientific knowledge into decision making tools for domestic and public consumers, producers, citizens, scientists, policy makers, civil society organizations.

Report to be quoted as: Zaklina Stojanovic, Biljana Jovanovic Gavrilovic, Dragan Loncar, Irena Jankovic, Bojan Ristic, Mirjana Gligoric. (2014) Global and Local Raspberry Supply Chains. National Level Report of Serbia. Belgrade: Faculty of Economics, University of Belgrade

www.glamur.eu 2

Global and Local Raspberry Supply Chains: National Report of Serbia

Zaklina Stojanovic, Biljana Jovanovic Gavrilovic, Dragan Loncar, Irena Jankovic, Bojan Ristic, Mirjana Gligoric

Faculty of Economics, University of Belgrade 2015

www.glamur.eu 3

Summary

The analysis of the local food chain addresses the Serbian fresh raspberries produced in the Arilje Municipality (Ariljska raspberry - Ariljska malina). However, almost entire raspberry supply chain in Serbia has been globally oriented. The research questions addressed in our case study are defined within the WP3 framework, while specific research questions are collaboratively designed with the Latvian team (Baltic Studies Centre, Riga) and address specific issues in berries sector. The report elaborates ten attributes in total while the common list of attributes was shortened for the purposes of the study. The Serbian raspberry supply chain was reviewed using the available statistics and studies, supplemented and strengthened by the WP3 field research (data gathered by in- depth interviews with key stakeholders in the chain). Our analysis shows that the global food chain performs better regarding resources use (land and labour productivity), wage level and labour relations, creation and distribution of added value and food safety (volume of production that has successfully passed the quality control). The Local food chain performs better than global in environmental, health, ethic, and even partially in economic (net income) dimension. Additionally, increasing of organic and traditional products supply in berry sector is marked as the strategic opportunity leading to the significant increase of the local raspberry food chain importance in the future. However, the global raspberry food chain has took more attention than the fresh (local) raspberry food chain in our practice as far as market, public & policy stakeholders opinion is concerned.

Key words: food chain, local, global, stakeholders, attributes performance.

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Contents Summary ...... 4 Contents...... 5 Abbreviations ...... 7 1. Introduction ...... 8 2. Case study definition - general overview...... 9 3. The Raspberries Local & Global FSC in Serbia ...... 19 3.1 Geographical scope...... 19 3.2 Description of local and global product ...... 21 3.2.1 Fresh raspberry (local chain) ...... 21 3.2.2 Frozen raspberries (global chain)...... 22 3. Research design ...... 23 3.1 Research questions ...... 25 3.2 Attributes selection process ...... 25 3.3 Selected indicators ...... 27 3.4 Selection of stakeholders and interviews - the participatory approach ..31 4. Results and discussion...... 33 4.1 Description of the chains ...... 33 4.1.1 Local FSC model (Fresh raspberries) ...... 33 4.1.2 Global FSC model (Frozen raspberries)...... 34 4.2 Stakeholder analysis - Global versus Local FSC...... 36 4.2.1 The Local supply chain stakeholders ...... 36 4.2.2 Global supply chain stakeholders...... 38 4.3 Description of attributes and indicators ...... 41 4.3.1 Creation and distribution of added value ...... 41 Added value...... 42 Distribution of added value...... 48 4.3.2 Contribution to economic development ...... 49 Net income ...... 49 Regional workforce ...... 51

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4.3.3 Governance ...... 57 4.3.4 Labour relations...... 61 Wage Level...... 61 Other labour relations indicators ...... 63 4.3.5 Other indicators ...... 64 Resource use/Efficiency ...... 64 Food safety...... 68 Responsibility...... 71 5. Conclusions...... 73 Literature ...... 75

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Abbreviations

AWU - Annual working unite ESU - Economic size of unite EU - The European Union NBS - The National Bank of Serbia PDO - Product Designation of Origin RS - The Republic of Serbia RSD - The Republic of Serbia Dinar SAFA - Sustainability Assessment of Food and Agriculture systems indicators SIEPA - The Serbia Investment and Export Promotion Agency SORS - The Statistical Office of the Republic of Serbia STIPS - The System of the market information for the agriculture in Serbia SWOT - Strengths, Weaknesses, Opportunities and Threats

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1. Introduction

Due to its high market share, global recognition and competitiveness, the raspberry production has been the most important fruit production in Serbia. This sector is also interesting due to its high potential of fresh and high value added market development (traditional food and organic production). Furthermore, the analysis of the raspberries sector allow deeper insights in the value chain linkages, resulting in local and global food chain attributes description as the main goal of this report. The Serbian raspberry supply chain holds an important position regarding the overall agricultural and rural development in the country. From the economic point of view, raspberries sector contribute in a high share to total agricultural export from Serbia to the EU and global market. Broader perspective includes the sector importance for the multifunctional rural development (development of activities connected with the storage facilities, packaging, transportation, trade & marketing of products). It includes ethic and social aspects as well, particularly relevant for the western regions of the country. This sector generates the significant contribution to farm income in the Sumadija & Western Serbia District. Currently applied production methods are mainly traditional and with the positive environmental impact. Finally, raspberries hold the superior properties compared to other fruits regarding the health benefits (particularly high antioxidants content is recorded for Arilje raspberry). The analysis covers specific areas of interests in evaluation of global and local aspects of food chain. The Serbian raspberry supply chain was reviewed using the available statistics and studies, supplemented and strengthened by the WP3 field research (data gathered by in-depth interviews with key stakeholders in the chain). Consequently, the relevant food chain stakeholders, such as representatives of producers, associations of producers, processors, policy makers, traders and certification bodies, were specifically targeted and engaged with the project research. The analysis of the local food chain addresses the Serbian fresh raspberries produced in the Arilje Municipality (Ariljska raspberry - Ariljska malina). However, almost entire raspberry supply chain in Serbia is globally oriented, and most of the raspberries are processed and exported as frozen product. Therefore the frozen raspberries food chain represents in our case the global food chain.

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2. Case study definition - general overview

Raspberry production in Serbia in the period 2005-2013 year ranged between 68,000 and 90,000 tones (production highly depends on weather conditions). The highest production of raspberries was achieved in 2011 (90,000 tones, whereas the lowest production values were recorded in 2012 (70,000 tones) and 2013 (68,000 tones).

Raspberry production in Serbia, in 000 tons

100 86 84 84 87 84 80 77 90 90

80 70 68 70

60 50

40

30

20

10

0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: SORS

Raspberry is produced on the area covering 15,433 ha in 2013. In Serbia, only 3- 5 % of areas planted with raspberry are irrigated (note: open air only).

Area planted, ha

16,000 15,800 15,600 15,400 15,200 15,000 14,800 14,600 14,400 14,200 14,000 13,800 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: SORS

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Raspberries picking in Serbia begins in late June and ends in July, depending on weather conditions and fields location. Most fresh raspberries are sold and consumed during the summer season, and only a small number is exported fresh mostly in the Western Balkan region. The fresh raspberries are cleaned, prepared and stored at a temperature of 0° C and transported in refrigerated trucks to their destinations within three days. Fresh raspberries are consumed or processed for homemade juices and concentrates. They account for less than 2- 3% of total raspberries production in Serbia which includes home made products of fresh raspberries (juices, traditional food). For small farms it is difficult to take advantage of the economy of scale and its production costs are usually high. Investments in transportation and technology improvements are required to facilitate export of high quality fresh raspberries. Also, they are characterized by low market and bargaining power. There exist a limiting number of organizations/cooperatives that can help farms to sell their raspberries at wholesale/green markets. The Federation of Associations of raspberry producers of Western Serbia exists from 2012. Fresh raspberries are sold at farm gates and wholesale and green markets. Intermediaries (buyers or traders) are buying raspberries directly from producers. They are usually located close to producers (usually in the municipality centre). They group fresh raspberries and transport them to processing facilities (cooperatives). Producers are facing the problems of transportation and usually sell fresh raspberries to wholesalers adequately equipped with storage and transportation means.

Total supply of raspberry in Serbia, in 000 tons

100 90 80 70 60 50 40 30 20 10 0 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 VI-V VI-V VI-V VI-V VI-V VI-V VI-V VI-V Begining stocks Domestic production Import

Source: http://www.mpt.gov.rs, Supply utilization balance: Raspberry

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The total annual supply of raspberries in Serbia varies between 77,000-95,000 tons and includes beginning stocks from the previous season, domestic production in the concrete period plus the import. The total supply and its structure for the June 2004-May 2012 period is presented in the Graph above. The annual consumption of raspberries is divided between domestic consumption and export. Domestic consumption encompasses domestic use in fresh and processed form, losses and ending stocks.

Total consumption of raspberry in Serbia, in 000 tons

100 90 80 70 60 50 40 30 20 10 0 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 VI-V VI-V VI-V VI-V VI-V VI-V VI-V VI-V

Domestic use Losses Ending stocks Export

Source: http://www.mpt.gov.rs, Supply utilization balance: Raspberry

The dominant part of Serbian raspberries is exported, predominantly in frozen form.1 A very small portion is exported as fresh.

Domestic use and export as % of total consumption of Serbian raspberry

2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 VI-V VI-V VI-V VI-V VI-V VI-V VI-V VI-V Total 23% 20% 8% 13% 33% 23% 20% 17% domestic use

Export 77% 80% 93% 87% 67% 77% 80% 83%

Source: http://www.mpt.gov.rs, Supply utilization balance: Raspberry

1 In Serbia, there are over two hundred cold storages with deep freezing regime (- 18°C), with capacity of 100 – 5.000 tons.

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Domestic consumption vs export of raspberry from Serbia, in % of total consumption

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 VI-V VI-V VI-V VI-V VI-V VI-V VI-V VI-V

Domestic consuption Export

Source: http://www.mpt.gov.rs, Supply utilization balance: Raspberry

Export of frozen raspberry amounted from 109.0 million of USD in 2005. to180.2 million of USD in 2012. After continuous growth from the beginning of the period, the export recorded stagnation in 2009 compared to the previous year and became volatile since then (recorded drop in 2010, recovery in 2011 followed by drop in 2012). This volatility is mostly due to prices of raspberry, because quantity exported was relatively stable during the observed time interval.

Serbia: Raspberries - Export, frozen, without sugar, 2005-2012 250000

200000

150000

100000

50000

0 2005 2006 2007 2008 2009 2010 2011 2012

Export Value, 000 USD Export Quantity, tones

Source: Statistical yearbook and Monthly statistical bulletin.

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The main export destinations for the export of frozen raspberries without sugar from Serbia are Germany, France, Belgium, Austria, Sweden and Great Britain. Total export to these six countries is 83 % of the export value of raspberries. The most important destinations for export of these products where more than half of their value is exported are: Germany (34 %) and France (24 % of total export value, see Graph below). Raspberries: Export ‐ categories of raspberries, average Value Exported by country destination in 2005‐2011 total exported value, average 2008‐2012

Original, 4% Other, 1%

Other countries, 17% Bruh, 7% Germany, 34% Blok, 7% Great Britain, 4% Rolend, 41% Sweden, 4% Fresh, 9%

Austria, 6%

France, 24%

Belgium, 11% Griz, 32%

Source: Statistical yearbook and Monthly statistical Source: Ministry of Agriculture, Forestry and Water bulletin Management based on SORS, Report 2012.

Data are given as average exported value share by country destination in the total value of exports of frozen raspberries from Serbia. Average value is calculated for a shorter period (from 2008 to 2012) and for the values of export of frozen raspberries considering that the data of the National Statistical Office were only available as export data of frozen raspberries with sugar before that time. If we look at export by raspberries categories, it can be seen that the major part of the export of raspberries "Rolend" (41% of export of this raspberry category is average value for the period 2005-2011). This category is followed by a raspberry "Griz" (32%), which is followed by the export of fresh raspberry (9%). Categories "Block" and "Bruh" make export share with 7% each, whereas the original raspberry is exported in small quantities (only 4% of the total export of

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raspberries).2 Detailed quantities of categories of raspberry exported are presented in the Graph below.

Export - categories of raspberries, average 2005-2011 90

79 80 73 71 70 62 63

60 53

50

42 t

000 40

30

20

10

0 2005 2006 2007 2008 2009 2010 2011

Rolend Griz Fresh Bruh Blok Original Other Total

Source: Ministry of agriculture, forestry and water management based on SORS, Report 2012.

Sale and purchase of raspberries are shown in terms of quantity and value, respectively (see next two graphs). Data are for the period from 2005 to 2012. The amount of sale and purchase of the territory of Serbia is in the range of 27,000-47,000 tons. In graph 10 it can be seen that the two extreme values of the volume of sale and purchase were reached in two consecutive years - 2011 and 2012, respectively.

2“Rolend” is category of raspberry that represents the name for whole, prime berries of identical colour. It is packed in 4 packs of 2.5 kg each, and in compliance with standards. “Rolend” is packed into 300g, 450g or 1kg packages and is used as input for final product in EU shops. Raspberry “Griz” is ground frozen raspberry, packed in 10kg and 15kg containers and used for industry. Usually, very small amount of ground raspberry end up in shops. Raspberry “Blok” represents the third class of frozen raspberry is used for the fruit juice industry. (Radosavljević, 2008).

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Raspberries: quantity of sale and purchase, 2005-2012 50 47 45 40 41 38 35 34 32 30 31 31 27 tones

25

000 20 15 10 5 0 2005 2006 2007 2008 2009 2010 2011 2012

Sale and purchase

Source: Statistical yearbook

Raspberries: value of sale and purchase, 2005-2012 6000 5279 5000 4917

4000

3871 3840 3364 RSD 3000 2954 mil. 2000 1592 1771 1000

0 2005 2006 2007 2008 2009 2010 2011 2012

Sale and purchase

Source: Statistical yearbook

When looking at the values of sale and purchase, they are due to price fluctuations highly volatile in relation to the data expressed in tons. The lowest value was recorded at the beginning of the observed period when 1,592 million RSD raspberries were sold and repurchased. After that, the value of sale and

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purchase reached its maximum in 2008. After the reduction in 2009, the value recorded its growth again followed by gradual decline during the last two years. Statistical Office of the Republic of Serbia regularly publishes information about the value of sales of raspberries at marketplaces. As we can see, with the extreme volatility of the value of sale, at the beginning of the period it was much lower than in the middle and end of the period. After the maximum value of sale at marketplaces recorded in 2008, the value was falling during the two consecutive years, and since 2010 this value has gradually increased. Thus, in 2012, the sale of raspberries at Serbian marketplaces amounted to 70 million RSD.

Sale of raspberries at marketplace, 2005-2012

90 80 83 70 70 70 60 62 63 55 50 RSD 46 40 mil. 36 30 20 10 0 2005 2006 2007 2008 2009 2010 2011 2012

Sale of raspberries at marketplace

Source: Statistical yearbook

Market prices data for fresh raspberries and other agricultural products are available from centralized System of the market information for the agriculture in Serbia (STIPS, http://www.stips.minpolj.gov.rs). Data on fresh raspberry prices are collected and provided by STIPS in the fruits category. It is important to notice that these data are available exclusively for the fresh raspberry and thus they are available only seasonally, in months when the raspberry is produced. It can be concluded that STIPS covers local supply chain of fresh raspberry. The scope of this short supply chain is national.

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The system offers data on weekly current market prices over time and main markets (cities in Serbia and their major markets places, plus it offers comparisons with Croatia and Montenegro markets). The system offers national reports on product prices, detailed reports on product prices, data on product prices in different cities and weekly bulletins for each product category.

Weekly average wholesale prices of raspberry in RSD/kg in the period 2004- 2013* 500

450

400

350

300

250

200

150

100

50

0 21. week 22. week 23. week 24. week 25. week 26. week 27. week 28. week 29. week 30. week 31. week 32. week 33. week 34. week 35. week 36. week 37. week 38. week 39. week 40. week 41. week 42. week 43. week 44. week

2004 2005 2006 2007 2008

500

450

400

350

300

250

200

150

100

50

0 21. week 22. week 23. week 24. week 25. week 26. week 27. week 28. week 29. week 30. week 31. week 32. week 33. week 34. week 35. week 36. week 37. week 38. week 39. week 40. week 41. week 42. week 43. week 44. week

2009 2010 2011 2012 2013

* Averages are calculated for weekly prices from wholesale markets in Belgrade, Kraljevo, Nis, Novi Sad and Subotica Source: http://www.stips.minpolj.gov.rs/stips/nacionalni

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National reports of fruit prices are providing weekly prices per kilogram for different sorts of fruits traded in the wholesale and green (retail) markets in Belgrade and other major cities (Kraljevo, Nis, Novi Sad, Subotica). Data are available for particular product sort, size and type of product packaging. Market prices of raspberry on wholesale and green markets in Serbia vary depending on product supply. On average, fresh raspberry is available on the market from week 21 till week 36. Belgrade market is, in general, facing higher prices of raspberry than other cities’ markets. It can be noted that wholesale prices in 2013 have increased in comparison to previous years reaching the levels between 230-500 RSD/kg (Euro 2.03-4.42).

Weekly average green market (retail) prices of raspberry in RSD/kg in the period 2004-2013*

1000 900 800 700 600 500 400 300 200 100 0 23. week 24. week 25. week 26. week 27. week 28. week 29. week 30. week 31. week 32. week 33. week 34. week 35. week 36. week 37. week 38. week 39. week 40. week 41. week 42. week 43. week 44. week

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

* Averages are calculated for weekly prices from green markets in Belgrade (Kalenic), Kraljevo, Nis, Novi Sad and Subotica Source: http://www.stips.minpolj.gov.rs/stips/nacionalni

Raspberry retail prices on green markets in Serbia differ based on the product origin, seasonal factors in production and concrete retail market. Availability of raspberry has prolonged to period between week 23 and week 44. Prices vary between 80-1000 RSD/kg, while they are significantly higher in Belgrade, especially at the beginning and the end of the season.

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3. The Raspberries Local & Global FSC in Serbia

3.1 Geographical scope

The fruit sector, in general, holds higher relative importance in the total agricultural activity in the selected regions compared to the Serbian average (see the graph below). According to Agricultural Census data, the total number of farms in Serbia is 631552 in the year 2012. More than one third of all farms are located in the Region of Sumadija & Western Serbia which is in our focus for the global raspberries food chain. Moreover, one third of total arable land in this region is specialized for the fruit production3 (dominantly raspberries). As far as the local food chain is concerned, total number of farms registered in the Arilje Municipality is 4793, while 27% of total arable land is dedicated to the fruit production.

No of farms and relative importance of fruit production in the selected regions

700000 35 631552

600000 30

500000 25

400000 20

300000 262940 15

200000 10

100000 5

4793 0 0 Serbia Sumadija & West Serbia Region Arilje Municipality

Number of farms % of total land dedicated to fruit production

Source: SORS.

3 The vineyards are excluded.

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Although raspberries production is the main activity of rural economy the Western Serbia, it is important to emphasize that the new (modern) farms exist also in the Northern part of Serbia (Region of Vojvodina). Their activity has been particularly evident starting from 2010, which have influenced the average yields in the sector. The new raspberries farms introduce new technology and use new varieties in production ("Polana" particularly). However, their influence on the global raspberries food chain is still very low, and therefore, we do not include data for Vojvodina in comparison of selected food chain attributes.

Raspberry production in Vojvodina: Area harvested, yields and average yields

3000 6,00 2630

2500 5,00

2000 4,00 1659

1500 3,00 1230 1124 964 1000 912 2,00

506 516 462 480 470 457 500 1,00

0 0,00 2008 2009 2010 2011 2012 2013

Area Yield, t Average yield, t/ha

Source: SORS.

From the spatial point of view, farms that belong to the global food chain are dominantly located in the Region of Sumadija & Western Serbia, while the Arilje raspberries producers represent the local fresh food chain in Serbia. Arilje represents a hub of raspberry production. Commercial raspberry growing is carried out in every village in the municipality (Market analysis of the fruit sector in Zlatibor County, 2010).

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The Region of Sumadija & Western Serbia The Arilje Municipality

3.2 Description of local and global product

3.2.1 Fresh raspberry (local chain)

The Arilje raspberry is the protected name for the raspberry with special features originating from Arilje region in the Western Serbia (reg.no 52 - The Republic of Serbia Intelectual Property Protection Institute). Fresh raspberries production from Arilje is an important economic activity of the Arilje Municipality (rural region). However, fresh raspberries production is also important for simultaneous development of other mutually dependable activities of rural economy. Arilje raspberry variety is particularly suitable for organic production. Fruit production has the largest share in total organic area (46.36%) in Serbia, while raspberries production counts around 13% of total fruit organic production (Organic agriculture in Serbia, 2013). Due to its nutritional properties, the Arilje raspberry is considered a the high value added food with huge

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potentials both at the domestic and global markets. Description of currently available product at the domestic market is given in the table below.

Description of product sold at local market Product - fresh raspberry Market Fresh Raspberry local green market - Arilje

Fresh Raspberry wholesale market - Belgrade Package - plastic box Net weight: 250 gr +- 10% per box.

Domestic fresh raspberry (I class) - retailers Package - transparent plastic box Net weight - 250 gr +- 10% Shelf life: 4 days at temperature range 0 to 8°C .

3.2.2 Frozen raspberries (global chain)

Almost 90% of raspberry production is frozen in cold storage plants, while only 10% of it is used for processing or sale in retail stores. Most raspberries are exported in frozen state (up to 93%). Semi-organized process for producers association that includes cold storages, transport and export. Raspberries are frozen at a temperature of -40 ° C and stored at temperatures between -18 and - 20. Most of the production is exported to EU market. Between 90-95 percent of Serbian raspberries is the North American “Willamette” - variety. Other raspberry varieties include “Meeker”, “Promise” and “Gradina” from Europe. (Buric, 2003).

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Description of product sold at global market

Product Name Packaging Willamet Raspberry Plastic bags - 500 gr - Meeker Raspberry 2,5 kg Cartons Boxes - 300 gr Large cartons - 10 kg

Raspberry whole and broken Plastic bags - 500 gr - - 80% whole + 20% 2,5 kg broken Boxes - 10 kg - 50% whole + 50% Cartons - 10 kg broken - 40% whole + 30% broken + 30% crumble Raspberry crumble Plastic bags - 2,5 kg Boxes - 20 - 30 kg Cartons - 10 - 14 kg

Raspberry Block Cartons - 14 kg

3. Research design

Serbia’s agricultural sector is dominated by private farms utilizing more than 85% of available agricultural land with state farms and cooperatives accounting for less than 15% of the UAA. It is a historical consequence of specific agrarian reforms performed before 1990s, during the socialist era. The private sector particularly dominates the supply of fruit, vegetables and milk in Serbia. However,

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the majority of these farms own less than five hectares, usually fragmented into a number of small separate parcels. Because of their small size, most of them are faced with signficant problems of trade negotiations with processors and wholesalers, who hold the power at the market. Consequently, many farming families are heavily dependent of farm income generated in highly unfovaurable conditions. This aspect imposes specific food chain structure and therefore – specific chain problems as well (for example - what would be best ways for horizontal and vertical integration, how sustainable development of rural communities could be achieved, etc.). The following necessary assessment elements in the comparison are identified: • Number of stakeholders involved in the different stages of food supply and their importance in terms of volume of production and trade, their size etc. • Quality of relationships between stakeholders - Chain governance (Does the production or marketing contracts exist or not? How these contracts are defined, what are their most important elements?) • Market power (related to purchase price of raspberries, value chain structure) • Production efficiency, positive/negative externalities (yields per ha over time, technology applied - inputs use per ha (energy, water, pesticides, fertilizer,…), QIF system, etc.) • How is the system institutionally supported - from local to national level including the NGO organizations (knowledge transfer, better organization of food supply chain)? • How local and global food chains contribute the local community and country competitiveness/development? This list of important issues concerning our case study includes all five dimensions (economic, social, environmental, health and ethical). Production and distribution of fresh raspberries would lead both to development of food supply chain and rural economy in the country. However, existing system of connections between food sector stakeholders allow only frozen raspberries market development. It seems that a lack of higher levels of processing indicates a low level of innovation, which is a consequence of lack of information and existing food chain organization.

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3.1 Research questions

The FP7 GLAMUR overall research questions (RQ) that are addressed in our case study as well: (1) What are the key food chain performance issues with regards to a global-local comparison?; (2) What is the methodological strength and weakness of overall applied comparative analysis?; and (3) What are the specific interactions of the food chains under study and the policy settings? The specific RQ are collaboratively designed with the Latvian team (Baltic Studies Centre, Riga) and address specific issues in berries sector. The additional questions are: (1) What are the main differences in organization between the local and global chains?; (2) How are governance and control enforced in the local and global fruit supply chains?; (3) How do the analysed LFSC and GFSC influence national and regional economies?; (4) Are costs and benefits distributed in a fair way among actors in the chain? How does this differ for the local and global chain?, and (5) What aspects describe labour market and common employment practices within sector? Elaboration aloud systematic approach to specific characteristics and attributes both of local and global food chains, leading to a meaningful comparison of different food chain dimensions in the focus of our analysis. 3.2 Attributes selection process

The analysis starts from definition of attribute given by the GLAMUR project Work Package 2. During the comparative study attributes have been defined and normalized basing on evidence from Latvian and Serbian contexts. Thus attributes are fine-tuned methodological instrument that serve as an optional tool for food chain performance assessment and comparison. The report elaborates ten attributes of local and global raspberries food chains. The common list of attributes has been shortened for the purposes of the study due to berry sectors particularities in the Latvia and Serbia. The list of attributes used in the study has been developed in several steps. First step was based on quick scan report. Interviews with chain actors and analysis of secondary data were used to identify initial list of attributes. This list was then discussed with project partners studying berries sector and trade in Latvia and apples production and trade in Belgium. During the discussion the list of common attributes were

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defined. Afterwards second round of interviews was conducted during which attributes where continuously tuned. The final list of attributes are illustrated in Table below. The common attributes are underlined (in the marked lines).

The list of attributes and attributes selected for the case Attributes (the list from WP2 Synthesis Serbia Report) Raspberry case 1. Affordability X 2. Creation and distribution of added value X 3. Contribution to economic development X 4. Technological innovation 5. Governance X 6. Efficiency X 7. Profitability/competitiveness 8. Connection 9. Resilience 10. Food waste 11. Information and communication 12. Food security 13. Consumer behaviour 14. Territoriality 15. Labour relations X 16. Resource use X 17. Pollution 18. Biodiversity 19. Nutrition 20. Food safety X 21. Traceability 22. Animal welfare 23. Responsibility X 24. Fair trade X

Selected attributes address main problems identified in the berry food chains. The identified list allows responding research questions posed for this study while the selected attributes corresponds the issues defined in description of the context. The analysis gives the main insights of the raspberry food chain development related to local/regional and national economy.

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3.3 Selected indicators

The attributes are measured by indicators. For each attribute we have defined a list of indicators. The selected common indicators, as well as specific indicators described in the Serbian case study, are presented in the table below.

The list of indicators

Brief attribute Used indicators Research questions Data collection description (cf. methods Comparative Report) Dimension Dimension Attribute The common set of indicators for comparison between Latvia and Serbia The attribute Value added Are costs and • Financial represents both – calculation benefits distributed in statements for how added value is Price for the a fair way among selected companies created and how it is farmer / final actors in the chain? (database distributed in FC. price of the How does this differ boniteti.rs) product for the local and • SORS database global chain? • In-depth interviews

Economic/ Social Creation and distribution of added value* Attribute that signifies Net Income What are the main • SORS database the contribution that Regional differences in • Financial FSC can bring to workforce contribution to statements for national, regional and national, regional and selected companies local economies. local economies (database regarding local and boniteti.rs) global chain • In-depth interviews Economic/ Social Contribution to economic development development ? Attribute covers Grievance What are the main • Policy documents regulation and procedures differences in • Secondary sources governance structure Conflict organization between • In-depth interviews as well as power and resolution the local and global presence of Legitimacy chains? democracy in food Civic How are governance chains. Responsibility and control enforced Free, Prior and in the local and global Informed fruit supply chains? Consent What aspects Sustainability describe labour Management market and common Plan employment Full-Cost practices within Accounting sector? Platform for

Ethical/ Economic Governance decision making

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Attribute identifies Right to Quality What aspects • Policy documents socio-economic of Life describe labour • Database welfare and Wage Level market and common boniteti.rs recognition of Employment employment • SORS database workers as well as Relations practices within • In-depth interviews considers risks these Freedom of sector? workers are exposed Association and to and analyses Right to availability of Bargaining qualified labour. Health Coverage and Access to Medical care Capacity

Social/ Ethical Social/ Ethical Labour relations Development The other indicators presented in the study Price paid by the final • SORS database Prices for consumer expresed • MoAFW-STIPS Affordability consumers in eur/kg of fresh or database frozen berries Product quality The share of the total • Observations and information volume of production • Secondary sources that meets quality • In-depth interviews Food safety standards which are • Republic of Serbia / necessary to ensure Institute of public safety, transparency health in trade and good eating quality Product Labelling Product labelling is • Observations an essential part of • Secondary sources transparent accountability to consumers. Labour Total kilograms of • SORS productivity raspberries produced • In-depth interviews Resource use/Efficiency per labour unit at farm stage Land productivity Total kilograms of • SORS raspberries produced • In-depth interviews per land use unit at farm stage Distribution of Price received by the • SORS Fair trade revenues producer compared • MoAFW-STIPS to the price payed by database the consumer Expended Environmental, • Secondary sources Responsibility sustainability Social, Ethical • In-depth interviews Economic and Healht aspects of Resposibility

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As indicated beforehand, we have selected four main attributes and the list of indicators allowing not only comparison of local and global food chains for the individual country, but also comparison of pairwaise countries case studies for the berry sectors. The previous food chain analysis in Serbia was performed without any comments on connections and comparisons of its local and global perspectives. Different bottom-up initiatives co-financed by the local governments were included in our report as a valuable input. Quality score of the selected indicators is given in the table below.

Quality score of indicators used for the berry case studies comparison Quality score* Name of the Bench- Definition* Scale* LOCAL GLOBAL indicator mark* CHAIN CHAIN Grievance Stakeholder access to fair grievance Scale 1 3 0.4 0.4 procedures procedures. to 4 Conflict Resolved conflicts of interests between % 80 0.4 0.4 Resolution stakeholders Legitimacy Enterprise's compliance to the law Scale 1 4 0.2 0.2 to 4 Civic This indicator illustrates the relations of Scale 1 2 1 1 Responsibility most powerful actors of food chains with to 3 laws and civic schemes protecting rights of the weakest food chain actors. Free, Prior and Indicator addresses consent achieved Scale 1/2 2 0.2 0.2 Informed between the big enterprises and the Consent community. Sustainability Does enterprise have a sustainability plan. Scale 1 2 0.2 0.2 Management to 3 Plan Platform for There is an interprofessional association or Scale 1 2 0.4 0.4 decision making a platform for all actors of the chain to to 3 meet and to negotiate. Right to Quality Primary producers, small-scale producers Scale 1 3 0.2 0.2 of Life and employees in enterprises of all scales to 3 have the right to a quality of life that affords time to spend with family and for recreation, adequate rest from work, overtime that is voluntary, and educational opportunity for themselves and their immediate families. Wage Level Percentage of wage above minimum wage % - 1 1

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level Employment Percentage of employees that have % 100 0.4 0.6 Relations legally-binding transparent contracts with their employers. Freedom of Evaluation of employees’ possibilities to 3 0.2 0.5 Association and associate and bargain. Right to Bargaining Health Do employees have health coverage and Yes/No - 0.4 0.6 Coverage and access to medical care Access to Medical care Capacity Do employees have access to capacity Yes/No - 0,2 0.4 Development development Value added Creation and distribution of added value % - 1 1 calculation Price for the Share of price received by picker % - 1 1 farmer / final price of the product Net Income % - 0.4 0.6 Regional Regional Workforce refers to the % - 0.6 0.6 workforce employees hired by the enterprise that come from the region where the enterprise operations are based. Shown as % of local employees. Land Total kilograms of raspberries t/ha - 1 1 productivity produced per land use unit at farm stage Labour Total kilograms of raspberries kg/ productivity produced per labour unit at farm stage labour - 0,6 1 unit Product quality Production that meets quality & information standards which are necessary to Scale 1 - 0,2 0,4 ensure safety, transparency in trade to 3 and food quality Product Product labelling is an essential part of Labelling transparent accountability to Scale 1 - 0,2 0,4 consumers. to 3 Prices for Price paid by the final consumer consumers expresed in eur/kg of fresh or frozen Euro/kg - 1 1 berries

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Fair trade Price received by the producer compared to the price payed by the % - 1 1 consumer Expended Environmental, Social, Ethical - 0,2 0,2 sustainability Economic and Healht aspects of Resposibility

*Definition – cell definition refers to explanation of our indicator interpretation; Scale – measurement instrument used; Benchmark – “values or qualitative descriptions of activities, used as the basis by which the performance of an enterprise is evaluated within an indicator domain to facilitate a rating of sustainability performance.” (FAO 2013, 216); Quality score – data quality score calculated basing of pedigree matrix approach; Chain L (local) and G (global).

3.4 Selection of stakeholders and interviews - the participatory approach

Activities performed for the WP3 were based on strong interactions with the food chain representatives (the participatory approach was implemented). From the very beginning of the case study analysis, main issues and the research questions where discussed with stakeholders. They were involved in in-depth interviewing, and during the additional data collection the stakeholders were constantly involved in verifying previously made conclusions. In our case study term “stakeholders” is accepted as a broader context, since it consists of all participants who directly or indirectly benefit from the raspberries supply chain. Thus, Government and Governmental organizations are mainly in collaborative relationships with farmers and raspberries associations, because raspberry is identified as a strategic exporting agricultural product in some parts of Serbia, and its production is essential to the standard of the agricultural population in certain regions of Serbia. In the frame of Government organizations quite meaningful participation of the SIEPA agency (Serbia Investment and Export Promotion Agency) should be noticed. SIEPA supports Serbian raspberry export. In addition to the Government organizations, some foreign organizations also appear as the game players (such as USAID). In recent past those organizations have shown considerable interest in this agricultural sector, through the sponsorship of a number of raspberry production development projects.

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The list of experts Stakeholder Function Position in the chain Global-local chain Serbian Chamber of Advisor for agriculture Market analysis Global-Local Commerce, Belgrade SIEPA Serbian export Food industry and Global promotion agency agricultural advisor Association of President The producers Global raspberries producers association Raspberry producer Farm manager and Production Local owner Association of President The producers Local raspberries producers association Local food company Trade specialist Warehouse / cold Local-Global storage and trader Certification company Quality insurance Certification Global inspector Global food company Trade sector manager Food company / Cool Global storage and Export Global food company Broker Exporter Global Ministry of Agriculture, Advisor Policy maker Global-Local Forestry and Water Management, Serbia Food processor Marketing manager Production Local-Global

The actors selected for the interviewing hold the key positions and importance both in local and global chain. Most of them have worked in the two types of chains and gave significant insights valuable for the comparisons. The information regarding the experts interviewed are given in the table above. Interviews were semi-structured and organized in the way that aloud comparison of results obtained for the fruit sectors in Latvia and Serbia (WP4). The main purpose of the interviewing was to find out specific data on production and trade that could not be found in the official statistics. Findings are qualitative in the nature, and they are incorporated in our reporting as additional information together with the secondary data available from the official statistical databases.

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4. Results and discussion

4.1 Description of the chains

4.1.1 Local FSC model (Fresh raspberries)

In this part we elaborate the typical models of local and global supply chains connected, respectively, to fresh raspberries from Arilje and frozen raspberries on the whole Serbian territory, as final products of Serbian agriculture. Therefore, fresh and frozen raspberries are subjects of our case study. In accordance to the fact that over 90% of the total raspberries production in Serbia is exported in the form of frozen raspberries, it is evident that fresh raspberries from Arilje represents only a small fraction of the total production of that specific fruit. Fresh raspberries supply chain is predominantly local in its character, and only a small portion of fresh raspberries is exported to neighbouring countries, i.e. regional markets when it comes to Serbia. Due to the fact that a negligible part of the local chain is oriented towards export to the neighboring countries, export is dropped as insignificant for local chain formation. This is certainly not the case with the global chain, where domination of export activities is obvious. Local supply chain, which refers to the fresh raspberries from Arilje is typical because it is a case of a specific product with a distinctive and protected origin. Fresh raspberries are predominantly consumed during the summer season (June-July) on the Serbian wide market, and only a small share (around 3%) is exported to the nearby countries in the fresh product form. Inputs for primary production are predominantly local by its origin, since this is a highly labor intensive production activity. Production of fresh raspberries mainly involves small farms with up to 0.5 hectares of fields under this perennial crops. For example, commercial raspberry growing is carried out in every village in the municipality and, according to estimates, the average farm cultivates raspberries over 0.25 hectares. Workforce on such farms is mostly made up of the family members and, when it is necessary during the picking season, seasonal workers. Logically, labor, water and land as production inputs are local in its nature. A significant portion of planting materials is produced in Serbia, where we should emphasizes the importance of the Fruit Research Institute from Cacak (town in the central part of middle Serbia) with up to 600,000 certified seedlings annually.

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Only a small portion of imported seedlings is used in the case of fresh raspberries supply chain (up to 5%).

Figure - Model of the Serbian local supply chain (Fresh raspberries from Arilje region)

Serbia

INPUT Suppliers INTERMEDIARIES WHOLESALERS

RETAILERS CONSUMERS FARMERS (Domestic)

CONSUMERS

The majority of fresh raspberries production (produced mainly on small farms) is being bought by intermediaries (buying agents or traders) and then directed to companies which perform fruit selection and refrigerated transport to the distribution (retail) channels, all the way to the final consumer. Each storage as well as transport of fresh raspberries involves 0oC cooling mode. A tiny branch of the local supply chain includes the export of fresh raspberries in the neighboring countries. Certainly this is the insignificant part of the total production of fresh raspberries from Arilje, and that’s the main reason why foreign component is missing in our model of local supply chain.

4.1.2 Global FSC model (Frozen raspberries)

Unlike a local supply chain, global one implies more complexity, since it involves significant portion of foreign participants. Medium and large farms have been added to the small farmers in the process of primary production. In accordance to the production stands Western part of the Serbia (Zlatibor district) should be underlined, because it alone generates up to 25% of total production of the country. As well as in the above mentioned case of the local chain, so-called low input technology in primary production is also present in the global context, with

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the prevailing share of the seasonal labor force during the raspberries ripening season. Over 90% of the total production of raspberry in Serbia is exported in frozen form. Raspberries are frozen at a - 40oC and stored between -18oC and -20oC (which applies also to the transportation). The largest portion of frozen raspberries is exported to the EU (94%) and the rest to the USA, Switzerland, Russia and Japan. Primary storage and transportation companies possess especially important role in the global context. They can be classified as intermediaries (buying agents/traders), cold storage companies, exporters and cooperatives.

Figure - Model of the Serbian global supply chain (Frozen raspberries) Serbia

FARMERS

EXPORTERS INPUT IMPORTERS suppliers Food service CONSUMERS FARMERS INTERMEDIAR. (Wholesalers) (I t ti l)

FARMERS RETAILERS

COOPERATIVES PROCESSORS RETAILERS (Domestic) (D ti )

Food service CONSUMERS (D ti )

Frozen raspberries are exported to foreign markets where they are usually repacked, because most of the Serbian companies do not meet the high standards when it comes to raspberries packing. Frozen raspberries are directed towards food processors, and after processing final food product through the distribution chain (food service operators) arrives to the domestic and to foreign consumers.

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4.2 Stakeholder analysis - Global versus Local FSC

Previous two figures represents typical raspberry production and sales channels in Serbia from which it is possible to identify key stakeholders and its relationship network. Therefore, the main stakeholders of both local and global raspberries supply chains are presented in the following network diagrams based on their relationship matrices. The nodes represent the main stakeholders on both diagrams and relationships are depicted by connective arrows. At first glance it is evident that the global network is far more complex than the local one (similar to supply chain models) since it has a higher number of stakeholders, and therefore significantly higher number of connections and relationships between them. Therefore, we will analyse them separately, starting with the local one.

4.2.1 The Local supply chain stakeholders

In short (local) food chain, as we already underlined, fresh raspberries are sold at green/open markets or on farm gate. It counts less than 2-3% of total raspberries production in Serbia. It also includes home made products of fresh raspberries (juices, traditional food – fruit preserve etc.). As major stakeholders of the local chain, we have emphasized: (1) input suppliers, (2) farmers, (3) intermediaries, (4) domestic retailers and (5) domestic consumers. All stakeholders are predominantly domestic, what is compatible by the nature of a local chain – subject of our analysis. Unlike the previously shown local chain, in order to simplify the analysis, we have included domestic wholesalers in the context of intermediaries. Based on interviews it was found that the role of intermediaries and wholesalers are often intertwined, which makes possible to connect them within one node in the network. The next table and figure illustrate the relationships between stakeholders in the local chain. Links can have a characters of: type 0 (no relation), type 1 (one player informs another one about its needs or demand) and type 2 (one player sells his product to another player).

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Relationship matrix of the Serbian local raspberry supply chain

LOCAL CHAIN Relationship INPUT RETAILERS CONSUMERS FARMERS INTERMEDIAR. matrix (Suppliers) (Domestic) (Domestic) INPUT 0 2 2 0 0 (Suppliers) FARMERS 1 0 2 0 2 INTERMEDIAR. 1 1 0 2 0 RETAILERS 0 0 1 0 2 (Domestic) CONSUMERS 0 1 0 1 0 (Domestic) Relationship type 0 Row player is not related to the column player 1 Information flow (Row player gives information to the column player) 2 Trade relation (Row player sales to the column player)

INTERMEDIARIES FARMERS 2 1 1 2 2 1

1 CONSUMERS (Domestic) 2 1 2 1

2

INPUT (Suppliers) RETAILERS (Domestic)

Network of actors in the Serbian local raspberry supply chain

In accordance with the number of relations established in the stakeholders network (Figure above), intermediaries and farmers turn out to be the most important nods. But in the light of the facts that the structure of farmers is

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atomized in comparison to the relatively small number of intermediaries, intermediaries seem to be the key players of the local chain and probably the ones with the highest market power. This is also supported by the fact that the production of raspberries is dominantly labor-intensive activity, where harvesting is done by hand and large number of seasonally workers is usually hired at picking. On the other hand we have intermediaries, with significant concentration of capital which, as it is already mentioned, group fresh raspberries and transport them to processing facilities (cooperatives). There are around 100 processing facilities (Djurkovic, 2012) where raspberry processing is done manually. Cooperatives can be also included under the term intermediaries in our stakeholder analysis of local chain.

4.2.2 Global supply chain stakeholders

Frozen raspberries are sold to food industry or mostly exported. Downstream food chain consists of regional centres (cooling houses) and brokers/exporters (Radosavljevic, 2010). EU is the most important market for Serbian raspberries (94%) and the rest is usually sold in USA, Switzerland, Russia and Japan. In EU Serbian raspberry is repacked to fulfil required standards and then re-exported to Australia, USA and Japan. More than 90% of Serbian raspberry production is frozen in cold storage and exported later on (Djurkovic, 2012). Accordingly, the global chain, as shown in next Figure, is partly domestic (located in Serbia), and partly related to the international space. In this sense all stakeholders can be separated in two groups, respectively, domestic and foreign. Therefore as the key players within domestic group we have distinguished: (1) input suppliers, (2) farmers, (3) intermediaries, (4) domestic processors, (5) domestic retailers, (6) domestic consumers, and within the international: (7) foreign importers (8) foreign processors, (9) foreign retailers and (10) international consumers. As in the case of a local chain, table and the following network diagram show the relationships between stakeholders in the global supply chain. Links can have a characters of: type 0 (no relation), type 1 (one player informs another one about its needs or demand), type 2 (one player sells his product to another player), but we have also type 3 as the difference from local chain, which implies mutual

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cooperation between players. Small, medium and large farmers are united into single nod in our relationship network, since their almost identical interconnection with other elements of the chain.

Relationship matrix of the Serbian local raspberry supply chain

GLOBAL CHAIN INPUT CONSUM. Relationship PROCESSORS RETAILERS IMPORTERS PROCESSORS RETAILERS CONSUM. (Suppliers FARMERS INTERM. (Domestic matrix (Domestic) (Domestic) (Foreign) (Foreign) (Foreign) (International) ) ) INPUT 0 2 3 0 0 0 0 0 0 0 (Suppliers) FARMERS 1 0 2 0 0 0 0 0 0 0 INTERM. 3 1 0 2 2 0 2 0 0 0 PROCESSORS 0 0 1 0 2 0 2 0 0 0 (Domestic) RETAILERS 0 0 1 1 0 2 0 0 0 0 (Domestic) CONSUM. 0 0 0 0 1 0 0 0 0 0 (Domestic) IMPORTERS 0 0 1 1 0 0 0 2 2 0 (Foreign) PROCESSORS 0 0 0 0 0 0 1 0 2 0 (Foreign) RETAILERS 0 0 0 0 0 0 1 1 0 2 (Foreign) CONSUM. 0 0 0 0 0 0 0 0 1 0 (International) Relationship

type 0 Row player is not related to the column player 1 Information flow (Row player gives information to the column player) 2 Trade relation (Row player sales to the column player) 3 Collaboration relation (Row player collaborates with the column player)

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Quality control, although shown in the model of the global chain, has been omitted in order to simplify the network of stakeholders, because it does not belong to a key players set in the global chain. Also, within the nod that belongs to intermediaries we have incorporated cooperatives, and wholesalers and exporters, since their connections are intertwined.

INTERMEDIARIES

1 2

FARMERS 2 2 RETAILERS (Domestic) 3 2 1 2 1 1 1 1 2 CONSUMERS 1 (Domestic)

1 2 2 3 PROCESSORS (Domestic) IMPORTERS (Foreign) 2 1 1 2 CONSUMERS 2 (International) INPUT (Suppliers) 1 1 2 RETAILERS (Foreign)

PROCESSORS (Foreign)

Network of actors in the Serbian global raspberry supply chain

Undoubtedly the largest number of significant relationships in this case belongs to intermediaries, which makes them as the most important part of network. Significant position goes with a significant bargaining and consequently significant market power which is primarily expressed in relation to the farmers as the primary producers. There are between 200-250 cold storages with deep freezing regime (-18C), with capacities between 100-5,000t, which at least tells the approximate number of intermediaries within the global chain. On the other side it is estimated that there are about 15,000 raspberry producers (Nikolic et al.). Serbian raspberry farms are small, usually family owned seasonal business. Average raspberry plots are between 0.5 and 1 ha. Farmers sell their products to intermediaries rarely directly to processing companies or exporters, usually with no further engagement.

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In other words, the bargaining power of farmers regardless of the size is not significant in comparison to intermediaries. For this reason, we do not distinguish between small, medium and large farmers when showing the relations among key stakeholders, since their roles in the network are almost identical. Government and non-governmental organizations are omitted within both the local and global chains and respective networks of stakeholders, in order to preserve the essence and transparency of key relations. Relations that could be established in the case of government and non-governmental organisations with other elements of network are provision of information or cooperation. The associations of raspberry producers are not listed too, because they cannot make any qualitatively different link with other elements of the chain which farmers already have.

4.3 Description of attributes and indicators

4.3.1 Creation and distribution of added value

The value added calculation in the process of production and distribution of fresh and frozen raspberry is important indicator of production factors employed capacity to efficiently utilize raw materials and other production services. The distribution of value added along the food value chain provides additional information about the chain participants’ power and dominance in the concrete production and distribution process of the generated product from the farm gate to final consumer. Thus, the value added indicators provide more information about food chain structure in sense of measurement of: • performance and productivity • growth and size, i.e. importance • vertical integration • economic concentration The added value is calculated as the difference between farm gate, wholesale and retail prices and non-factor costs at each stage of the food chain from producer to final consumer.

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The unit value added can be calculated as the difference between the sale price and the production cost of a product plus the unit depreciation cost and the unit labour cost. Total value added is gained through summing value added per unit over all units sold. Total value added is equivalent to revenues less outside purchases of materials and services. In order to estimate the value added in the raspberry value chains for Serbia we have collected the balance sheet data for small and medium size companies that are processing and distributing fresh and frozen raspberries and raspberry products for the period 2009-2013. We have collected data for 31 companies based on the Serbia Investment and Export Promotion Agency (SIEPA) database. Balance sheet data are provided by database Boniteti.rs. In our sample we have 20 small and 11 medium size companies. Two subsamples are created: first referring to raspberry processing and export companies that represent global raspberry food chain and the second composed of main producers and wholesalers of fresh raspberry. Based on the Balance sheet and Income statements of these companies the Value added and Value added per employee is calculated for global and local raspberry food chains based on the following formulas:

Value added = (Operating profit – Business loss) - (Increase in inventories – Decrease in inventories) - Other operating income Value added per employee = Value added / the average number of employees

Data are then aggregated for local and global subsamples and average values are calculated.

Added value

Global chain Serbia is predominantly exporting raspberry in the frozen form. The average value added and value added per employee in the global raspberry chain are provided in the table. Data indicate high total and per employee value created in

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the pre-crisis period and significant drop in the recession years characterized by decreasing demand and export. Average value added and average value added per employee for raspberry processors and exporters In Euros 2009 2010 2011 2012 2013 Average value added 21789.59 1130.36 25827.83 7313.62 -799.1314 Average value added/employee 497.75 -15 1082.40 87.25 364.25 Source: Authors’ calculation based on SIEPA and Boniteti.rs data

Average value added and average value added per employee for raspberry processors and exporters, in Euros

30000 1200

25000 1000

20000 800

15000 600

10000 400

5000 200

0 0 2009 2010 2011 2012 2013 -5000 -200

Average value added Average value added/employee

Source: Authors’ calculation and presentation based on SIEPA and Boniteti.rs data

Based on the available average farm gate, wholesale and retail prices of raspberry per kg (Statistical Office of the Republic of Serbia and STIPS) and exchange rate data from the NBS we have estimated value added created and distributed in each segment of the chain per kg of raspberry. Value added creation and distribution in global raspberry food chain

In Euros/kg 2005 2006 2007 2008 2009 2010 2011 2012 2013

Farm gate price 0.471 0.68 1.142 2.107 1.199 1.2643 0.8082 1.104 1.6284

Farm costs* 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7

Wholesale price 0.807 0.975 1.588 2.787 2.001 2.0865 1.4713 1.5911 2.2981

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Retail price 1.615 2.342 2.989 3.684 2.906 4.2701 1.9617 2.6519 3.0052

Value added Farm gate price - costs -0.229 -0.02 0.442 1.407 0.499 0.5643 0.1082 0.404 0.9284 Wholesale price - farm gate 0.336 0.295 0.446 0.68 0.802 0.8222 0.6631 0.4871 0.6697 Retail price- wholesale 0.807 1.367 1.401 0.896 0.905 2.1836 0.4904 1.0607 0.7071 Total value added per kg 0.915 1.642 2.289 2.984 2.206 3.5701 1.2617 1.9519 2.3052 Value added for the farmer -25% -1% 19% 47% 23% 16% 9% 21% 40% Value added for the wholesaler 37% 18% 19% 23% 36% 23% 53% 25% 29% Value added for the retailer 88% 83% 61% 30% 41% 61% 39% 54% 31% Farm gate/retail price 29% 29% 38% 57% 41% 30% 41% 42% 54% (Wholesale - farm gate) /Retail price 21% 13% 15% 18% 28% 19% 34% 18% 22% (Retail – wholesale) / Retail price 50% 58% 47% 24% 31% 51% 25% 40% 24% Source: Authors’ calculation based on Statistical Office of the Republic of Serbia, STIPS and NBS data * Farm costs data are available from Swiss Agency for development and Cooperation, Market analysis of the fruit sector in the Zlatibor county, Serbia and interviews with relevant sector’s stakeholders

Value added creation and distribution in global raspberry food chain, in Euros/kg

4.5 4 Retail prices 3.5 3 Wholesale prices 2.5 Farm gate prices 2 1.5 1 0.5 Farm costs 0 2005 2006 2007 2008 2009 2010 2011 2012 2013

Retail prices Wholesale prices Farm gate prices Farm costs Source: Authors’ calculation and presentation based on Statistical Office of the Republic of Serbia, STIPS and NBS data

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For example, in 2013, the value added distribution could be illustrated in the following manner:

Farm gate Wholesaler Retailer

Consumer 40% 29% 31%

It can be noticed that value created per kg of raspberry was mostly increasing in the 2005-2013 period reaching the peak in 2010 and significant drop in 2011 with recovery tendency in the following years. The significant drop in 2011 was related to price decrease in 2010. And what is of high importance is the increasing share of farmers in created value distribution in the whole chain, from negative values in mid 2000s to 40% in 2013 indicating their increasing cooperation and market power.

Local chain The local raspberry chain refers to the sale of fresh raspberry in the wholesale and green markets in Serbia. Due to dominant export of produced raspberry the remaining local supply, or the part sold in the local wholesale and retail, i.e. green markets, as less organized value chain is subject to higher price for the final consumer and higher value added for the wholesalers and retailers.

Average value added and average value added per employee in the local fresh raspberry chain In Euros 2009 2010 2011 2012 2013 Average value added 1831 8582 24489.33 11703 15907.67 Average value added/employee 1223.33 2907 4626.33 1622.33 1555 Source: Authors’ calculation based on Boniteti.rs data and interviews

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While less dependent on the external demand, domestically sold raspberries resulted in more stable food chain participants value added.

Average value added and average value added per employee in the local fresh raspberry food chain, in Euros

30000 5000 4500 25000 4000 20000 3500 3000 15000 2500 2000 10000 1500 5000 1000 500 0 0 2009 2010 2011 2012 2013

Average value added Average value added/employee

Based on the available average farm gate, wholesale and retail prices of fresh raspberry per kg (Statistical Office of the Republic of Serbia and STIPS) and exchange rate data from the NBS we have estimated value added created and distributed in each segment of the local fresh raspberry chain per kg of raspberry.

Value added creation and distribution in the local raspberry food chain

In Euros/kg 2005 2006 2007 2008 2009 2010 2011 2012 2013

Farm gate price 0.471 0.68 1.142 2.107 1.199 1.2643 0.8082 1.104 1.6284

Farm costs* 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7

Wholesale price 1.258 1.209 1.72 2.777 2.413 2.0794 2.2058 2.3327 2.8084

Retail price 1.886 2.965 3.66 4.485 3.409 3.4047 4.3045 3.7745 3.7458

Value added Farm gate price - costs -0.229 -0.02 0.442 1.407 0.499 0.5643 0.1082 0.404 0.9284

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Wholesale price - farm gate 0.787 0.528 0.577 0.67 1.213 0.815 1.3976 1.2287 1.18 Retail price- wholesale 0.628 1.757 1.94 1.708 0.997 1.3254 2.0987 1.4418 0.9374 Total value added per kg 1.186 2.265 2.96 3.785 2.709 2.7047 3.6045 3.0745 3.0458 Value added for the farmer -19% -1% 15% 37% 18% 21% 3% 13% 30% Value added for the wholesaler 66% 23% 20% 18% 45% 30% 39% 40% 39% Value added for the retailer 53% 78% 66% 45% 37% 49% 58% 47% 31% Farm gate/retail price 25% 23% 31% 47% 35% 37% 19% 29% 43% (Wholesale - farm gate) /Retail price 42% 18% 16% 15% 36% 24% 32% 33% 32% (Retail – wholesale) / Retail price 33% 59% 53% 38% 29% 39% 49% 38% 25% Source: Authors’ calculation based on Statistical Office of the Republic of Serbia, STIPS and NBS data Farm costs data are available from Swiss Agency for development and Cooperation, Market analysis of the fruit sector in the Zlatibor county, Serbia and interviews with relevant sector’s stakeholders

For example, in 2013, the value added distribution in the local raspberry food chain could be illustrated in the following manner:

Farm gate Wholesaler Retailer-green market

Consumer 30% 39% 31%

Through comparison of value added created in the global and local raspberry food chain it can be noticed that higher value per kg of raspberry is created in the local chain. The value created also indicates lower volatility over time in the local market.

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Distribution of added value

Concerning the value created distribution among food chain participants it is evident that producers have more significant role in recent period in both chains with relatively higher share in the global chain value distribution. Local chain as less organized and standardized keeps space for further improvements and need for better organizing of raspberry producers that would increase their market power and share in value created distribution.

Value added per kg in global vs local raspberry food chain in Serbia

4 3.5 3 2.5 2 1.5 1 0.5 0 2005 2006 2007 2008 2009 2010 2011 2012 2013

Value added in global chain/kg Value added in local chain/kg

Source: Based on authors’ calculations

Global raspberry food chain participants’ shares in value created

140% 120% 100% 80% 60% 40% 20% 0% -20% 2005 2006 2007 2008 2009 2010 2011 2012 2013 -40%

Farmers - global chain Wholesalers - global chain Retailers - global chain

Source: Based on authors’ calculations

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Local raspberry food chain participants’ shares in value created

120% 100% 80% 60% 40% 20% 0% -20% 2005 2006 2007 2008 2009 2010 2011 2012 2013 -40%

Farmers - local chain Wholesalers - local chain Retailers - local chain

Source: Based on authors’ calculations

4.3.2 Contribution to economic development

Net income

Based on the Income statements for 31 fresh and frozen raspberry producing and export companies Net income data have been collected and aggregated in local and global chain subsamples. Then average values and average values per worker were calculated and are presented below. Average net income per employee is calculated for global and local raspberry food chains based on the following formula:

Revenue - Expenses = Earnings before taxes - Taxes = Net income/loss / number of workers

Global chain Global raspberry chain as significantly dependent on foreign demand has faced post-crises demand and revenue reduction that led to net losses in 2012.

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Average net income and average net income per worker for raspberry processors and exporters In Euros 2009 2010 2011 2012 2013 Average net - income/loss 179757.13 188620.84 463709.99 351614.02 95520.22 Average net income/worker 3236.7 2865.64 6969.34 -5203.59 1585.40 Source: Authors’ calculation based on SIEPA and Boniteti.rs data

Average net income and average net income per worker for raspberry processors and exporters, in Euros

8000 450000 6000 350000

250000 4000

150000 2000 50000 0 -50000 2009 2010 2011 2012 2013 -2000 -150000 -250000 -4000

-350000 -6000

Average net income/loss Average net income/worker

Source: Authors’ calculation and presentation based on SIEPA and Boniteti.rs data

Local chain Since local raspberry food chain is mostly linked to domestic demand, net income generated in domestic raspberry food chain was steadily increasing in the previous five year period.

Average net income and average net income per worker for fresh raspberry food chain In Euros 2009 2010 2011 2012 2013 Average net income/loss 9330.23 35659.37 52234.14 154044.20 140946.54 Average net income/worker 6997.68 17829.69 17411.38 30808.84 18384.33 Source: Authors’ calculation based on Boniteti.rs data and interviews

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Average net income and average net income per worker for fresh raspberry food chain, in Euros

180000 35000 160000 30000 140000 25000 120000 100000 20000 80000 15000 60000 10000 40000 20000 5000 0 0 2009 2010 2011 2012 2013

Average net income Average net income/worker

Source: Authors’ calculation and presentation based on Boniteti.rs data and interviews

Net income data for global and local raspberry food chains confirm Serbia’s important role in export of frozen raspberry on the foreign markets and as such significant dependency of those flows and value created on external markets and demand instability. On the other hand, local market for fresh raspberry shows a potential for further growth that is confirmed by steady increase in the net income generated in the local raspberry food chain.

Regional workforce

Regional Workforce refers to the employees hired by the enterprise that come from the region where the enterprise operations are based. It distinguishes community, municipality or region where the enterprise operations are based. It distinguishes with those employees that come from other regions, or countries, not directly involved with the community and micro-environment where the enterprise operates. The indicator is defined based on the SAFA (C 4.1.1.). The contribution of the enterprise to the local economy through the employment of local professionals and technicians is a significant component of sustainable development and might benefit the long-term business viability of the enterprise. There are several principles that could frame the value creation of the enterprise to the local economy when hiring regional workforce: it creates an adaptable

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skilled labour force; it supports employment progression and skills upgrading; it contributes to develop local governance and to build local capacities; it invests in education and training of the selected employees; and it contributes to improve local employment rates through job creation. Agriculture is still fundamental for rural economy in Serbia (the modern rural economy is still in its infancy, and the first stage of rural development characterized by significant share of agricultural activities in the overall rural economy), as the welfare of rural people is dependent on the success of agriculture. For the regions in the focus, the fruit production, particularly raspberry, is of extremely importance for the household income. However, there is significant difference between Sumadija & Western Serbia region and the Municipality of Arilje regarding this issue. Well known and developed tourism destinations in Serbia are located in Sumadija & Western Serbia region. Number of farms capable to generate income "around the agriculture activities", particularly connected to rural tourism, in this region is 34,41% higher than the Serbian average. Opposite, the activities of farmers in the Municipality of Arilje are more oriented toward the agricultural sector. Number of farms with non- agricultural income in the local food chain is 29,66% lower than the Serbian average (SORS, 2012). Generally, standard output per farm is still lower in this region compared to the Serbian average (see the graph below).

No of farms with other sources of income and standard output per farm

90000 10000,00

78301 80000 9000,00

8000,00 70000 7000,00 60000 6000,00 50000 43816 5000,00 40000 4000,00 30000 3000,00 20000 2000,00

10000 1000,00 418 0 0,00 Republic of Serbia Sumadija & West Serbia Municipality of Arilje

No of farms Standard output per farm

Source: Authors’ calculation based on SORS.

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The next graph demonstrates a share of the number of persons working on family farms on one hand, and the number of persons working in enterprises and with entrepreneurs on the other hand, in the total number of employee in agriculture in Serbia.

Farms structure in Serbia by economic size 120%

100%

80%

60%

40%

20%

0%

in 000 EUR

Enterprises

Household members

Share of farm in total number of farm, by economic value

Source: Authors’ calculation based on SORS.

The shares are displayed according to the economic value of the households (intervals on the x axis expressed in 000 EUR). In the graph it can be seen that in Serbia family farms are of primarily less economic power, while entrepreneurs and enterprises have great economic power. However, the black line in the graph shows that the greatest number of workers on households is just at the lowest levels of the scale, i.e. even 37% of all farms earns up to 2,000 euros per year, 60% of them earns up to 4,000 euros per year and 81% of them earns up to 8,000 euros per year.

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Farms by ESU in the regions in our focus The Sumadija The & Western Municipality of ESU Serbia Region Arilje 0-2 112803 2345 2-4 60676 1106 4-8 52183 848 8-15 23286 328 15-25 6070 52 25-50 2223 13 50-100 474 1 100-250 119 1 >100 131 0 Total 257846 4694 Source: SORS.

Having in mind previously elaborated farms structure by economic size, small farms dominate particularly in the local food chain. By definition, small farms should be more concentrated on family workforce. The next graph shows AWU (Annual Working Unite) in the local and global food chains in comparison to the Serbian average in 2012. Unexpectedly, it could be noticed that the Municipality of Arilje farms generates significantly larger portion of seasonal workforce. People from all over the Serbia, and even from other countries (Kljajić, 2013), each year traditionally find a job during the peaking season in Arilje. As far as the global food chain is concerned, raspberry producers are more oriented toward family members’ engagement in production process followed by new technology and equipment implementation in the practice.

The Illustration: In-depth interview typical statements "Although family members are involved during the top of season, it is still not enough. We are forced to attract the additional workers. These are seasonal workers who traditionally come in the local community not only from neighbouring municipalities, but all over the Serbia. I always employ members of the same family year by year." (Local producer) "Seasonal workers from neighbouring countries are engaged too. They live in the cross-border municipalities. Faced with problems of unemployment they use the opportunity to win over the season." (Policy maker) "Harvest seasons can employ up to 200.000 workers." (Producers association)

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AWU in the local and global food chain, deviation from the Serbian average 2012.

25

20

15

10

5

0 workforce Farmers members permanent permanent workforce seasonal -5 seasonal workforce workforce entities Family entities Farm Legal Farm Legal

-10

-15

The Municipality of Arilje The Sumadija & West Serbia Region

Source: Authors’ calculation based on SORS.

Data of a share of the number of annual work units specialized in fruits (except for citrus, tropical fruits and nuts) in the total number of annual work units heavily supports previously mentioned conclusions regarding the regional workforce.

Specialized farms in fruit sector: AWU structure 80% 71% 70%

60% 54%

50% 43% 42% 40% 40% 34%

30%

20% 14% 13% 12% 11% 10% 7% 7% 4% 5% 4% 5% 4% 3% 3% 2% 0% 0% Permanently Seasonal Seasonal Permanently employed workforce and workforce and Overall Holders of Household employed workers in the workforce the workforce workforce households members workers on enterprises and under contract in under contract family farms with enterprises and on family farms entrepreneurs entrepreneurs Serbia 4% 4% 3% 3% 2% 12% 11% Sumadia & West Serbia Region 5% 5% 4% 7% 7% 14% 13% Arilje Municipality 42% 40% 34% 0% 71% 54% 43%

Source: Authors’ calculation based on SORS.

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The data have been given both for Serbia and the region of Sumadija and Western Serbia and Arilje Municipality. Additionally, data are separately displayed for holders of households, household members, permanently employed workers on family farms, in enterprises and with entrepreneurs. Data are also separately shown for seasonal workforce and the workforce under contract on family farms and in enterprises and entrepreneurs as well as for the overall workforce. Next graph shows a share of the number of annual work units of workers who are seasonal workforce and the workforce under contract specialized in fruits (except for citrus, tropical fruits and nuts) in the number of annual work units of both farm holders and members specialized in the production of the same fruits. The data have been given for the region of Sumadija and Western Serbia as well as for Arilje Municipality. In the graph we can see that in Sumadija and Western Serbia region there is one seasonal worker on every 7 farm household persons whereas in Arilje there are a great number of seasonal workers – one seasonal worker on every 2 farm household persons.

Number of seasonal workers compared to number of household members

60% 51% 50%

40%

30%

20% 15%

10%

0% Sumadija & West Serbia Arilje Regon Number of seasonal workers divided by number of 15% 51% household members

Source: Authors’ calculation based on SORS.

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The analysis confirms higher labour intensity of the Serbian raspberry local food chain compared to the global one. Raspberries are grown on small family owned farms on lots that average 0.5 hectares. They are picked by hand. Small scale producers are organizing planting, crops care, irrigation, weed control, pruning, picking, storage and transportation. Generally, traditional, low input technology is dominantly applied. Opposite, the farms cooperating within the global food chain are technologically more equipped, and consequently, not heavily dependent on seasonal workforce.

4.3.3 Governance

The attribute analyses governance structure of local and global raspberry food chains in Serbia. Indicators in the focus are defined as follows: grievance procedures, conflict resolution, legitimacy, civic responsibility, free, prior and informed consent, sustainability management plan, and platform for decision making. However, civic responsibility might be also considered as a constitute part of Responsibility as an unique food chain attribute. The results were obtained by secondary sources and experts in-depth interviews, and summarized in the table below. The research confirms better governance of the global raspberry food chain than the local one, except for Free, Prior and Informed Consent. Indicators for attribute “Governance”

Chain Bench- Indicator Comments mark L G Grievance 4 4 4 Indicator is measured with scale where 4 - highly operational grievance procedures procedures (significant share of actors have access and are satisfied with official or unofficial grievance procedures); 3 - rather operational grievance procedures (most of the actors have access and are satisfied with official or unofficial grievance procedures); 2 - rather un-operational grievance procedures (some of the actors does not have access or remains unsatisfied with the grievance procedures); 1 – un-operational grievance procedures (most of the actors does not have access or are unsatisfied with the grievance procedures). Conflict 80 90 80 - Resolution Legitimacy 2 4 3 Scale: 4 - actors of food chain complies to the law (and ensures that when new legal problems are indicated they are immediately solved) and monitors the legitimacy of their collaboration partners. Additional inner codes may be established; 3 - actors of food chain complies with the law, however, collaboration partners are not controlled. Compliance remains within each enterprise and overall inner food chain control is lacking; 2 - in general actors of food chain comply with the law. However, some actors may exploit the weaknesses

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of regulation system (either by exploiting production or distribution aspects laws have not defined or by benefiting from the lack of controlling structures); 1 - actors in food chains are openly breaching the law yet this does not influence their access to food chain. Civic 1 1 1 Scale: 3 - actors are responsible and promote the rights of weakest chain participants; 2 - Responsibility big entities does not hinder nor promote rights of other actors; 1 - big entities try to hinder the rights of smaller actors. Free, Prior and 2 1 2 Scale: 2 - relevant enterprises has had a discussion and consent with local community about Informed its influence on surrounding space and/or realizes its created impact and is working to Consent reduce it; 1 - relevant enterprise have not had a discussion and consent with local community and is not reducing its impact on local community. Sustainability 2 3 2 Scale: 3 - enterprise has a written sustainability plan that addresses all main sustainability Management dimensions; 2 - enterprises analyses sustainability of their decisions, however it does not Plan have a written sustainability plan; 1 - enterprises does not consider how sustainable their decisions are. Platform for 2 2 2 Scale: There are several questions that should be taken into account to evaluate this decision making indicator: (1) are there such an association/ platform; (2) does it have a real power; (3) does it have regular meetings; (4) is it representing all of the food chain; (5) do everybody holds a power to express themselves. IF all five questions can be answered with YES, than the mark for the indicator should be 3 - there is a platform for decision making; if (1) and (2) = YES, but (3) or (4) or (5) = NO, than the mark for the indicator should be 2 - there is a platform only partially; if either (1) or (2) = NO or (3) and (4) and (5) = NO, than mark the indicator with value 1 - there is not a platform for decision making.

Local chain The research shows significant share of actors with the access to official or unofficial grievance procedures both in the local and global food chain. Although actors of the local food chain comply with the law in general, some actors exploit the weaknesses of regulation system. The actors benefit from the lack of controlling structures particularly regarding the market structure and food safety. The participants in the local food chain in most of cases have no written sustainability plan. In spite of the fact that the local action plans exist, partners at the local level usually set their own development alternatives in more unofficial way. This particularly refers to the local family farms.

The Illustration: In-depth interview typical statements "The union of berry fruit producers in Serbia has asked President to intervene to protect them from retailers who have reduced raspberry purchase prices. This form of protection simply continues to be implemented year by year." (Local Trader) "The Ministry should take our problems seriously and save 300,000 employees in this open-air factory from possible lay-offs." (Local Producer) "The inspection teams have been sent to observe the situation and to ensure compliance with the Law on Protection of Competition." (Policy maker)

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As far as governance indicators are concerned, particular attention should be paid to the conflict resolution. The position of small producers depends on developments in the supply chain (Zarić et al., 2012). Conflicts are resolved usually "on the streets" (by blocking the roads). Dissatisfied by farm gate price offered by traders or processors, producers use the practice of blocking regional roads, and resolve the problem directly with the national government and local authorities. The farmers groups have developed their activities at the local level starting from the 2010 particularly. They continue to gather a small number of producers (at the moment on average around 15 family farms). They plan to increase food safety requirements as well as to improve distribution and marketing of the fresh raspberries. Producers groups therefore pay special attention to the technology improvement, thus giving local farmers greater stability in terms of organization and supply. However, the leaders of the groups are local traders or processors instead of producers.

Global chain Generally, the global food chain performs better than local in majority of selected governance indicators. Generally, actors of food chain comply with the law and ensure that when new legal problems are indicated they are immediately solved and monitor the legitimacy of their collaboration partners. If we look at the number of trials in selected 31 fresh and frozen raspberry producing and export companies in 2013, the highest number of trials was registered in a local company (23). The companies that belong to the global food chain recorded 3 trials on average in the observed year, while the local companies were faced with 8 legal processes on the court on average. Well know companies that operate at global market put a lot of attention to education of their local partners in the chain. They educate farmers about the new methods of production, implementation of new technologies, intensive production input use, how to increase yields per ha etc. Furthermore, this companies supply farmers with production inputs (fertilizers and other chemicals, or even mediate in providing favourable conditions for the purchase of machinery for farms. The farmers involved in the global food chain, on the other hand, comply with the international standards related to food production and safety, and

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act completely as entrepreneurs or modern agribusiness producers. Their production is under the constant control by the foreign partners and traders. However, the similar problems noticed in the local food chain persist in the global food chain too. The following fact was particularly emphasized by our experts: big entities try to hinder the rights of smaller actors. The selected companies number of trials, 2013.

Source: Bisnode database

The chain failed particularly to build closer contacts with the local community in the context of sustainable development and resources use. Although the chain actors have a written sustainability plan that addresses all main sustainability dimensions, relevant enterprises have not had a discussion and consent with local community and are not reducing its negative impact on resources use (soil and water quality).

The Illustration: In-depth interview typical statements "The year 2014 of raspberries in Western Serbia began with a great expectations of producers, with announced contracts with foreign buyers. The agreements guaranteed the price for all produced raspberry. Then, suddenly, right before harvest, contracts were cancelled!" (Association of raspberry producers) "Only an irresponsible company will sign a contract in March for the purchase of almost entire raspberry crop without even knowing what will be the quality, what will be the price... It was clear from the very beginning that it was impossible." (Policy maker) "Inspections observe the situation and determine which retailers are attempting to reduce the purchase price for raspberries." (Advisor, Chamber of Commerce)

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4.3.4 Labour relations

Wage Level

In 2011 some 150,000 people were employed in agriculture and some 90,000 people were employed in the food processing industry in Serbia. This represents (on aggregate) 12% of the total labour force. However, the share of agriculture in the total active population takes in addition the labour force also self-employed and unemployed people as well as unpaid occupations into account. Information on the commercial farms in the agricultural households’ record shows some 450,000 active farmers in Serbia, which equals some 15% of the total active population of Serbia. "Active population" includes all persons with an active occupation. Active occupation is defined as "activity for earning a living". The term "active population" takes into account all people of a minimum age of 15 who (i) carry out professions and (ii) are unemployed and looking for a job.

Economically active population performing the occupation, by activities

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% The Republic of Serbia The Sumadija & West Serbia The Arilje Municipality

Agriculture, forestry and fishing Manufacturing Wholesale and retail trade Transportation and storage

Source: Authors’ calculation based on SORS.

There is a negative deviation from the average salary in Serbia in all observed years in the following areas: Agricultural production, hunting and related service activities, Manufacture of food products, Retail trade, except for motor vehicles and motorcycles, and Activity of preparing and serving food and drinks. The higher average salary than the average salary in Serbia is only at Wholesale trade, except for motor vehicles and motorcycles.

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20%

10%

0%

‐10%

‐20%

‐30%

‐40%

‐50%

‐60% Agricultural Wholesale trade, Retail trade, except Activity of preparing production, hunting Manufacture of food except for motor for motor vehicles and serving food and and related service products vehicles and and motorcycles drinks activities motorcycles 2005 ‐32% ‐1% 10% ‐23% ‐42% 2006 ‐30% ‐3% 12% ‐24% ‐41% 2007 ‐35% ‐11% 5% ‐22% ‐38% 2008 ‐29% ‐11% 6% ‐18% ‐36% 2009 ‐22% ‐16% 9% ‐37% ‐47% 2010 ‐23% ‐18% 11% ‐38% ‐47%

2005 2006 2007 2008 2009 2010

Source: Authors’ calculation based on SORS.

As far as the districts in the focus are concerned, a negative deviation of the average salary in relation to average salary in Serbia per year is noticed. The line shows deviation of the average salary in Arilje Municipality from the average salary in Serbia. The average salary in the local community in the focus is much lower than in other districts were raspberry production is concentrated in the region (the graph shows related data of four out of six districts in the Sumadija & Western Serbia region).

Deviation of the average salary compared to average salary in Serbia ‐40%

‐35% ‐36% ‐37% ‐30% ‐30%

‐22% ‐25% ‐24% ‐20% ‐16% ‐15%

‐10%

‐5% 2005 2006 2007 2008 2009 2010 0%

Kolubara Distrct Sumadija Distrct Zlatibor Distrct Morava Distrct Arilje Municipality

Source: Authors’ calculation based on SORS.

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Particular attention should be paid to importance of the seasonal work force. Based on the data collected by in-depth interviews, no matter of fact whether the global or local food chain is concerned, the seasonal workers are usually paid 15 euros per day (around 600 euro per season). The differences between global and local food chain exist in number of workers and working hours per day. In addition to farmer's family members primary producers pay on average four seasonal workers per farm (the average size of farms is 0,5 ha) during the picking season. Duration of a working day is 12 hours with a break for lunch. Accommodation and food are included. The workers have no employment contract and are directly paid in cash. The global food chain experts emphasized that seasonal workers usually work under the contract - 8 hours a day (56 hours per week). The average number of seasonal workers on the farm that operates in the global supply chain is 3 per hectare in full time equivalent.. Raspberries are generally ripe for harvesting in June/July (duration of the picking season is about 1,5 months).

Other labour relations indicators

Other labour relations indicators of local and global food chain are presented in the table below. If we look at the role of education, it should be noted that companies that operate globally invest in education and constantly contact the manufacturers in the context of application of new technologies. On the other hand, local producers are supported by their associations, as well as by local government that invests in training programs of farmers. Education programs are supported through programs of public-private partnerships and co-financed by the international institutions that support the development of the farming sector in Serbia. The Indicators for attribute “Labour relations” Chain Bench- Indicator Comments (L) (G) mark Right to Quality 2 3 2 Scale: 3 - employment follows national and global labour regulations and does not of Life have any restrictions that would employees right to choose; 2 - employment has small deviations from national labour regulations or have insignificant restrictions; 1 - employment has significant deviations from national labour regulations or have significant restrictions for employees. Employment 70 100 90 Seasonal work force in the local food chain is not officially contracted. Relations Freedom of 2 3 3 3 - addressed employees has freedom of association and understands this right; 2 -

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Association and addressed employees theoretically has freedom of association, however, they either Right to do not understand it or are afraid to practice it; 1 - addressed employees does not Bargaining have freedom of association. Labour unions in the sector are passive although the Agricultural Labour Union has existed since 2011. Health No Yes - Work force under the contract have full access to health coverage and medical care. Coverage and Farmers and their family members are also users of health and social insurance in Access to Serbia. Only seasonal workers in the raspberries local supply chain are in a grey zone Medical care regarding insurance. Through the National Employment Agency they are registered as unemployed, and have full access to the public health services. Capacity Yes Yes - Educational programmes are designed both for local and global food chain Development participants in the context of capacity development.

Finally, the raspberry production is also faced with general problem related to the emigration of manpower from villages and an increased number of older people. On the other side, there are lots of uneducated and unqualified seasonal workers, especially in the prime fruit-picking season including workers from the EU (Romania and Bulgaria) (Zarić, 2012).

4.3.5 Other indicators

Resource use/Efficiency

Average annual yield of raspberry in Serbia varies between 4.4-5.8 t/ha. In the local food chain raspberries are grown on small family owned farms on lots that average 0.5 hectares. They are picked by hand. Small scale producers are organizing planting, crops care, irrigation, weed control, pruning, picking, storage and transportation. The farms involved in the global food chain activities are larger on average (farm size varies from 5 to 50ha).

Average yield, t/ha

7.0

5.8 5.7 5.5 5.8 6.0 5.6 5.4 5.3 5.3

5.0 4.5 4.4

4.0

3.0

2.0

1.0

0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: SORS.

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A deviation of the average yield of raspberries expressed in tones per hectare in Central Serbia, where the Region of Sumadija & Western Serbia, as well as the Arilje Minicipality are located, in relation to the average of this indicator (average yield) in Serbia is presented in the graph below. We can notice from the graph that only in 2010 the average yield was slightly below the average yield of raspberries in Serbia whereas in all other observed years it was by 1.5-2.5% higher than the average in Serbia.

The average yield of raspberries in the Region in relation to the national average 5.0

4.0

3.0 2.4

% 1.8 2.0 1.6 1.7 in 1.4

1.0

‐0.1 0.0 2008 2009 2010 2011 2012 2013 ‐1.0

Source: Authors’ calculation based on SORS.

Based on the Agricultural census data, 2012 and the official statistics (SORS) the yields per hectare were calculated for global and local raspberry food chains. The farms were fragmented based on their size, and total yields, arable land and number of workers per farm were calculated for two subsamples. The huge difference is the result of the application / non application of agro-technical measures (use of fertilizers and pesticides, as well as modern machinery and irrigation on the farm).

Land productivity (yields kg/ha)

Food chain Local Global

Yields (kg/ha) 7.700 30.000 Source: Authors’ calculation based on SORS, the Agricultural census data.

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Having in mind previously noticed differences between local and global raspberry food chains in Serbia, the analysis of type of farming and land under irrigation confirms why such a huge difference exist. The next graph shows the percentage of the size of land that is irrigated in a separate region (Sumadija and Western Serbia) and municipality (Arilje) in the total area under irrigation in Serbia.

Irrigated land 30%

25%

20%

15%

10%

5%

0% Sumadija & West Serbia Region Arilje Municipality Irrigation 28% 3%

Source: Source: Authors’ calculation based on SORS

However, the local food chain yields are still higher than average in Serbia as a result of favourable micro climate conditions for raspberry production in the Municipality of Arilje. The municipality of Arilje is located in Western Serbia, within the Zlatibor district, at the altitude between 330 and 1,382 m. It is the smallest of ten municipalities in the district. Arilje has the world reputation for the raspberry production, so it is often called the world capital of this aromatic fruit. This municipality has the biggest concentration of plantations in the world – more than 5,000 small plantations grows raspberry.

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A) Global food chain ‐ larger farms on average with the modern equipment

B) Local food chain ‐ small farms on average keep tradition

An Illustration: Differences between farms cooperating within the local and global chain

Due to its traditional orientation in production methods applied and high labour intensity, the local raspberry food chain performs worse than global one in the context of labour productivity.

Labour productivity (yields kg/labour unite)

Food chain Local Global

Yields (kg/h) 14,10 43,71 Source: Authors’ calculation based on SORS, the Agricultural census data.

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Food safety

Institutional framework Development of food safety policy in Serbia, is supported by its Veterinary and Phytosanitary Directorates, which have a regional network of offices throughout Serbia. The Ministry of Agriculture, Forestry and Water Management is also responsible for coordinating the services of veterinary laboratories and phytosanitary laboratories (the number of the latter has considerably decreased recently). Of equal importance is the Ministry of Health (MoH). The MoH has a network of approximately 36 regional public health institutes, which are also responsible for food safety issues and carry out inspections of food retail premises. The Food Safety Law has implemented starting from the year 2009. In acknowledging the necessity of investments the EC has supported Serbia’s efforts to upgrade its system of food safety. In a first step the equipment of veterinary, phytosanitary and food-safety laboratories was upgraded and the laboratories themselves were refurbished. In addition facilities and equipment for the veterinary and phytosanitary inspection at external border crossings was supplied. Veterinary and phytosanitary border inspection facilities at nominated border posts have been installed in order to ensure effective veterinary and phytosanitary control of imported food products.

Food quality / health - volume of production that has successfully passed the quality control Food safety as an attribute should be measured by share of the volume of production that has successfully passed the quality control. From the institutional point of view, the National Reference Phytosanitary Laboratory within Directorate for National Reference Laboratories has jurisdiction over performance of public tasks according to the Law on Plant Health and the Law on Pesticides (biological efficacy of pesticides). Totally 14 regional phytosanitary laboratories within agricultural stations exist. in Sombor, Novi Sad, Vrbas, Sremska Mitrovica, Vrsac, Pancevo, Kikinda, Kragujevac, Krusevac, CACAK, Smederevo, Nis, Vranje and Zajecar). Only five regional phytosanitary laboratories (Sombor, Sremska Mitrovica, CACAK,

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Smederevo and Nis) perform detection and some identification tests for harmful organisms. Regional Phytosanitary Laboratory Cacak is registered for fruits control (The Sumadija & Western Serbia Region). The National Public Health Institute (Batut) each year publishes The Health Statistical Yearbook of Serbia. Particular attention is paid to the health safety of drinking water (physicochemical safety and microbiological safety). Additionally, the focus is also on systematic monitoring of air quality (emission) performed by measuring and recording the values of certain indicators within the urban network of sampling sites. The Report also covers health safety of food and consumer goods in the Republic of Serbia (infant formulae, follow-on formulae, food for infants and baby’s food, food for weight reduction diets, food for special medical purposes, – a gluten-free food, dietary supplements, enzyme preparations for food products and food processing aids). Unfortunately, there are no publicly available reports on raspberry phytosanitary control. Having in mind the overall restrictions, secondary sources and the typical statements were used to describe the volume of production that has successfully passed the quality checks both for domestic and international consumption as a qualitative indicator.

The Illustration: An In-depth interview and secondary sources typical statements "Due to the high quantities of pesticides used in its cultivation some raspberry shipments (very small amounts, such as a couple of hundred tons) had been returned recently from the EU markets due to high pesticide levels."(Exporter) "This only concerned shipments which were falsely declared as organically grown." (Producers association) "There are rules, but the monitoring of their full implementation is not applied in practice." (Food industry and agricultural advisor) "The control found more than 20 active substances in the raspberry. In our country, for example, with raspberry fruit stipulates the presence of specific component to two milligrams, while the world accepted norms allow only 0.02 milligrams" (Certification body) "Raspberry is red gold for Serbia. It is the most important export product. So it is very important to give precise instructions on how to properly apply agro technical inputs in the production process, especially fertilizers and plant protection inputs." (Trader) "They examine whether fruit has traces of pesticides that are banned, and do not control whether the dose may be increased by some 2,000 pesticides in use and

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whether the goods are sold under the withdrawal period on open (green) markets." (The consumer organization representative, Daily journal Novosti, 18. July 2013).

Although the food safety institutional framework exists, implementation of food safety rules is still in its infancy in Serbia. Both chains are faced with this issue. However, the global food chain has exposed its production to additional controls of foreign inspections and bodies responsible for the food safety issues. Therefore, the traders as well as processors in the global food chain strongly argue on strict implementation of the internationally standardized rules. The international standards are completely adopted by major exporters in Serbia. At least, the global chain is more controlled and standardized than the local raspberry food chain in Serbia. Food quality / health - product labelling Serbian Red Raspberries are prized for their color, flavor and firmness. Due to content of carbohydrates, vitamin c, antioxidants, organic acids, anthocyanins and elagic acid, this fruit is often advertised as with the specific nutritional and health properties. Generally, raspberries from Serbia have a good reputation. The fresh local product from Arilje is additionally protected by a geographical indication registration within the country of Serbia. Producers and other stakeholders are considering promoting this Geographical indication (GI) produce outside of Serbia with the neighboring countries as the targeted markets. . However, the willingness to pay is slightly higher for organic raspberries than for GI labelled raspberries. This could imply that a combination of strategies, rather than focusing on GI labelling only, may be more beneficial for Serbian producers (Ivana Radich & Maurizio Canavari, 2014). The export of fresh raspberry is just in the initial phase in general, and protecting geographical indication of raspberry from Arilje also in the EU is seen as a good opportunity for the whole western area of the country. Organic raspberry production produces sufficient quantities of high quality food with a rational exploitation of natural resources and preservation of the environment. Organic agriculture is a sustainable, natural alternative for the intensification of production methods and presents a production management system that promotes the recovery of ecosystems. Encouraging fact is that the

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land under organic production in Serbia is constantly growing, in fruit sector particularly in raspberry production.

Responsibility

This indicator is derived from the SAFA (G 2.2.1). The SAFA indicator relays on the enterprise’s governance body who takes responsibility for the enterprise’s performance in each pillar of the SAFA. The proposed indicator is slightly differently described in our report. We assume that responsible governance count on the good chain stakeholders’ performance in each of five GLAMUR dimensions (economic, social, health, environmental and ethic). It is a qualitative indicator, and it can be "counted" only after all other indicators were counted and known. As our report doesn't cover all dimensions, we will focus only on the indicators used in our study.

The Responsibility of the raspberry food chains stakeholders in Serbia The indicator The Local The Global raspberry chain raspberry chain Added value 2 1 Net income 1 2 Regional workforce 1 2 Governance indicators 2 1

Fair trade 2 1 Affordability 2 1 Wage level 2 1 Labour relations 3 1 Land productivity 3 2 Labour productivity 3 2 Food quality / food safety 2 1 Food quality / product labelling 1 2 Total 24 17 Mean 2 1.41 Mode 2 1

The performance of this attribute is assessed by the qualitative means of research. We use mark one to three to describe the stakeholders responsibility over the FP7 GLAMUR dimensions (1 means "the chain stakeholders can clearly

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show that its governance takes responsibility for its impact"; 2 - "The main players in the chain has consistently excluded the views of relevant stakeholders"; 3 - "The chain stakeholders has not taken early responsibility for its impact in any dispute with the other chain stakeholders"). Under the term responsibility for the impact we concern positive impact of the chain within the specific dimension. Lower the total score - higher responsibility of the chain.

* * * Finally, price received by the producer compared to the price paid by the consumer (Fair trade) as well as price paid by the final consumer expressed in euro/kg of fresh and frozen raspberries (Affordability) were already explained in the section Creation and distribution of added value.

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5. Conclusions

Starting from the indictors applied in the process of global and local food chain assessment in Serbia, the main conclusion regarding the chains advantages and disadvantages are derived. The results are summarized using the SWOT matrix (see table below).

SWOT analysis of global and local raspberry food chain in Serbia Local raspberry food chain Global raspberry food chain Strengths Favourable conditions for production Strategic importance regarding export Preservation of varieties and traditional Use of irrigation systems and modern method of production inputs Positive effect on employment and Technology improvement development of other gainful actitiviies of Quality of employment - qualified and rural economy educated labour Health properties of the fresh raspberry High productivity Proximity to the major markets Improvement of the commercial services ISO standardization and increase of product quality Food safety and quality control systems Developed storage capacities Weaknesses Land fragmentation - small average size High input costs and availability of inputs of farm High transportation costs High post-harvest losses Perishable crop Aged farmers and rural devastation Lack of standards Lack of marketing knowledge and services

Opportunities Farming methods to improve yields and Development of the export trademark / sustainability Branding Improvement of the packaging design Higher level of product finalization in own Role of producers organzations processing capacities High value added food (traditional and organic) International support to local community Treats Low purchasing power at local and Price volatility regional market Climate change Low access to the new technologies Lower profit for farmers Low level of education of agricultural Rising input costs producers Change in consumer preferences Migration of young population to the Competition / other large exporters urban areas The local community capacity

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The Local food chain performs better than global environmental, health, ethic, and even partially in economic (net income) dimension. However, regarding the overall market, public & policy sphere stakeholders opinion, the global raspberry food chain took more attention than the fresh (local) raspberry food chain in our practice. The main reasons are found in high significance of the global raspberry food chain for the overall economy development, including the activity of rural areas in the Sumadija & Western Serbia region. Furthermore, the study argues about better performance of the global food chain regarding resources use (land and labour productivity), wage level and labour relations, creation and distribution of added value and food safety (volume of production that has successfully passed the quality control). Strict application of standards and implementation of regulations in the practice, as well as better governance structure (greater participation of adequately linked stakeholders) lead to higher efficiency of the entire chain. However, the most recently published scientific papers in the domestic journals argue about exploration of PDO or organic raspberry production as the strategic opportunity as far as the fruit sector development in Serbia is concerned, which might lead to the significant increase of the local raspberry food chain importance in the future.

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