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“A turbulent year for farmers – inflation, protests, census.”

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The year behind us in agriculture was marked by inflation, high prices of basic foodstuffs, African swine fever, census, and farmers’ protests.

In 2023, Serbian citizens spent the most money on food, as some basic food items doubled in price due to high inflation. Products such as meat and dairy derivatives reached the highest prices. Agro-economist Milan Prostran mentioned that the food prices were particularly serious, especially in the second and third quarters of 2023.

During the third quarter, as well as the first half of the year, dairy products, vegetables, meat, electricity, bread, cereals, and firewood were significantly influential in the price increase.

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The analysis “Trends, Third Quarter 2023” highlighted that the year-on-year food price increase in the first three quarters of 2023, at 22.3%, was primarily determined by the rise in dairy product prices by 33.9%. Specifically, yogurt, fruit yogurt with added cereals, kefir, fresh cheese of all kinds, and full-fat milk contributed significantly to the overall price increase, accounting for 12.4%.

Although the year-on-year price increase for vegetables slowed to 32.6% compared to the first half of 2023, it was still mainly determined by the prices of onions, especially red onions, potatoes, bell peppers, carrots, and tomatoes, which constituted the core of the vegetable price increase in the first three quarters, while the only deflationary impact was due to the price of garlic.

During the first three quarters of this year, the year-on-year price increase for bread and cereals at 18.4% was predominantly driven by the increase in prices of white bread, savory snacks, salty sticks, sausages, pretzels, and all kinds of pasta, contributing to 57.2% of the overall rate of increase in bread and cereals.

When it comes to the year-on-year increase in meat prices during the first three quarters of 2023, which amounted to 16.2%, it was primarily driven by the inflation of boneless pork, bacon, boneless beef and veal, and sausages made from pork, beef, and mixed meat, contributing to a total of 41.6% in the annual rate of meat price increase during the first three quarters.

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The prices of pork were influenced both by African swine fever and weak domestic production. Fruit was devastated by storms, while grain prices were significantly affected by last year’s drought.

“We didn’t have problems with supply because Serbia’s food balance meets domestic needs. However, due to weather disasters, climate changes, the war in Ukraine, significant crop damage in fruit and vegetables, and last year’s drought, prices were high. Domestic producers are trying to offset losses through higher product prices. Now there’s a battle for the survival of these primary producers who are suffering the most. Traders will manage; they can import the necessary products,” stated Prostran.

High margins and the “Better Price” initiative

During 2023, the National Bank of Serbia (NBS) and relevant ministries influenced retailers to reduce margins. According to an analysis conducted by the NBS based on publicly available financial reports of five major retail chains over the past three years, it was noted that trading margins of this group significantly increased, negatively affecting the central bank’s efforts to bring inflation back within target ranges. Simultaneously, the central bank urged retail chains not to take advantage of the situation and to pursue a “measured” margin policy.

As another measure to curb inflation, the government implemented an initiative called “Better Price,” which lowered prices for specific items by 20 to 40%.

According to the latest report from the Republic Statistical Office, the “Better Price” initiative, through the effect of substituting goods, slowed down the year-on-year inflation rate.

“In the period from October to November 2023 compared to September of the same year, it was on average lower by about 18.1%, or 1.9 percentage points,” announced the Statistical Office.

Results of the Agricultural Census Awaited

Mid-December saw the completion of the agricultural census, with its final results expected to be published successively by December 31, 2025.

The essential characteristics recorded during this census about agricultural households include identifying data, land holdings, categories of agricultural land use, workforce information, and livestock numbers.

According to agriculture experts, the census is anticipated to reveal the actual situation within domestic agriculture, serving as the basis for creating studies that will guide future agricultural policies.

Regarding expectations from this census, agricultural analyst Milan Prostran mentioned to that a notable aspect to be observed will be the reduction in agricultural land.

“The reduction primarily stems from infrastructure projects, although the number of agricultural households might even be higher. Livestock numbers are significantly worse off compared to 2012 when the previous census was conducted, indicating a substantial decline, particularly in dairy cattle and pig farming. Unfortunately, pig farming has been additionally devastated due to the African swine fever,” Prostran stated.

Farmers’ Frequent Protests

The entire calendar year was marked by farmers’ protests. Discussions with representatives of the Serbian government and the Ministry of Agriculture were held several times, with varying degrees of success.

The fundamental demands of farmers remained unchanged, encompassing the removal of excise duties on fuel at all gas stations, the regulation of commodity exchanges, resolving issues with storage facilities, raising subsidies per hectare to 35,000 dinars, exempting interest on debts to the Pension and Disability Insurance Fund (PIO), and obtaining more favorable loans for agriculture.

Looking ahead to the next year, farmers can anticipate a budget of nearly one billion euros and the reinstatement of excise duties on diesel and biofuel. A new regulation issued by the Minister of Finance and the Minister of Agriculture has already come into effect but will be implemented from January 1, 2024.

The regulation stipulates that the return of excise duties in agriculture can be obtained for a maximum of 100 liters of diesel and biofuel.

There is also a limitation concerning the cultivated land area. The focus will be on how much fuel is needed for the cultivation of sown or planted land areas under specific crops, up to a maximum of 100 hectares.

To submit a request for the excise duty refund, farmers will be required to have fiscal receipts. For individual farmers, these receipts will need to include the agricultural household number.

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