In light of the stable business climate observed over the last two quarters, as indicated by Coface’s country risk assessment rating of A4, and considering the characterization of the agri-food sector in Central and Eastern Europe as moderately risky due to several factors, it becomes imperative to closely analyze this sector in Serbia.
The sector’s relative resilience to the COVID-19 crisis, stemming from the essential nature of food demand, is regarded as a primary advantage for businesses in the agri-food sector. However, there are also notable drawbacks to consider:
- Vulnerability to fluctuations in energy and input prices, particularly in light of the conflict in Ukraine, which has been a focal point for companies in this sector during our market research.
- Price variability in agricultural products.
- Exposure to climatic and biological hazards, exacerbated by the increased occurrence of extreme events such as heatwaves, floods, and fires.
According to Statista, the Serbian food market is expected to grow annually by 6.13%. In Serbia, the meat segment represents the largest market share, with a volume of $2.15 billion in 2023.
In assessing companies at Coface, we aim to gain a comprehensive understanding of each economic entity’s current status and the primary factors influencing its operations. This assessment is not solely based on financial data but also encompasses qualitative insights into the reasons underlying companies’ performance.
One of the most significant issues highlighted by companies in analyses conducted by Coface is the impact of inflation and the Ukraine conflict, which has led to a surge in energy prices, significantly increasing operating costs. Regarding the conflict’s implications, Serbia’s supply routes suffered less damage compared to competitors, exerting pressure on companies striving to overcome challenges stemming from increased operational costs. Some companies managed to maintain good financial indicators by increasing sales volume.
The following graph illustrates revenue performance across industries, including the agricultural sector, for Q4 2023 and companies’ expectations for Q1 2024. According to data from the Statistical Office of the Republic of Serbia, Serbia exported agricultural products worth €3.8 billion by the end of October 2023, while simultaneously importing food worth €2.7 billion.
Serbia recorded a surplus in agricultural trade of €1.1 billion in the first ten months of the previous year. Quantitatively, Serbia exported 3.8 billion tons of goods and imported 1.4 billion tons of various products categorized as agri-food. Looking at categories, Serbia imported over 3,600 tons of live animals while exporting 15,000 tons.
Conversely, it imported 68,000 tons of meat and meat products, exporting 23,000 tons. Regarding cereals and cereal products, exports amounted to 1.5 million tons, while imports were only 104,000 tons. Among agricultural products, Serbia imports mostly fruits and vegetables, totaling 467,000 tons. Examining the value of exported agricultural production, the most significant products are fruits and vegetables, with exports exceeding €870 million, followed by cereals at €562 million, tobacco and tobacco products at €450 million, while the lowest export value is for animal products, oils, and fats, at €4.12 million.
Additionally, the highest imported goods value was in fruits and vegetables, exceeding €526 million, followed by coffee, tea, cocoa, and spices and spice products, imported for €305 million. Other imported food products and processed foods amounted to €253 million.
Aligned with data produced by Coface for assessing the Serbian agricultural market, signs of market stabilization are noticeable and require monitoring in the coming period. Fluctuations in input prices, particularly post-COVID-19 pandemic, and during the Ukraine conflict, have presented additional challenges for companies. There’s increased caution among companies when setting long-term business plans, reflecting the market’s unpredictable nature.
Companies in the agricultural sector have expressed their ability to finance ongoing operations optimally in 2023, with their responses depicted in the following graph.
