Vukosav Sakovic, Association Serbia Grains: “Serbia produces more grains than it needs and therefore is export-oriented country. Serbia exports between 3.5 and 4 million tonnes of grains annually. We are constantly looking for new markets. We always emphasize that Serbian law prohibits the production of GMO products and that we fight for our place at the international market with good quality and competitive prices. This year Serbia had produced about 8 million tonnes of corn and 2.5 million tonnes of wheat. By the next harvest, we expect to export 3 million tonnes of corn and 1 million tonnes of wheat.”
Interview: Namık Kemal Parlak
The Balkan country Serbia is among the 10 largest corn and wheat exporters in the world. Serbians are proud of their good quality of corn and wheat. With its fertile land and natural conditions for agricultural production, the country has the potential to increase its grain exports and is looking for new markets. In that regard, Association Serbia Grains organized an international grain conference in Belgrade at the end of October. Vukosav Sakovic, Executive Director of Association Serbia Grains, gave an exclusive interview to Miller Magazine at the sideline of the conference. We talked on the grain policy of Serbia, dynamics in the grain sector and new export markets for Serbia grain and also challenges that Serbia grain exporters face.
Here are Mr. Sakovic answers to our questions:
Could you please give us some information about the Association Serbia Grains? What is the mission of your Association?
Association Serbia Grains is an association of grain producers and exporters with over 40 years of tradition. Forty-eight member companies include manufacturers and exporters of grains and oilseeds, companies that are dealing with storing and accompanying services, quality control, crop protection, transport of bulk commodities and port operators. Associations Serbia Grains company members mutual share in total grains and oilseeds export from Serbia, in period from 2008 to 2018, equaled 65 to 87% of total annual exports for wheat, 68 to 86% for corn and 89 to 98% for oilseeds (sunflower seeds, soybeans and rapeseed together).
Main mission is to improve the production and export of grains and oilseeds from Serbia. Some of the main activities of the Serbia Grains Association are as follows:
• Grains and oilseeds production volume and quality improvement to meet the balance requirements of the country and increase the export of grains;
• Representation of members interests with government authorities and business associations;
• Creating conditions for the work of the Association in cooperation with state authorities;
• Arbitration function on domestic market to resolve disputes arising in the sale of grains and oilseeds;
• Organizing performance in foreign markets in order to eliminate unfair competition;
• Organization of economic and informational propaganda in the media, at trade shows, grain and oilseed conferences and similar events;
• Initiating cooperation between members, promoting specialization in order to increase production and exports;
• Creating information system for association members;
• Creating new standards and regulations on quality in accordance with current European and world standards;
• Organizing education for producers and exporters.
Can you tell about Serbia’s role and place in the Black Sea grain market and world grain market?
We are witnessing a time when the center of world grain trade, primarily wheat, moved from North America (Gulf of Mexico) to the Black Sea region. The Black Sea is surrounded by large wheat producers. Of the ten largest wheat producers in the world, three are located in the Black Sea region (Russia, Ukraine and Turkey). In addition to the mentioned countries, other countries of the Black Sea region like Romania, Bulgaria, have an important role in the world wheat production, and Hungary, Croatia and Serbia have their connection with Black Sea region via the Danube River. Serbia exports between 3.5 and 4 million tonnes of grains annually and 70% of its exports are through the Black Sea ports, most often through the Romanian port of Constantza. With an average annual corn export at the level of 2.7 million tonnes, Serbia is consistently among the 10 largest corn exporters in the world. The results are slightly more modest for wheat - with an annual export of 1.1 million tonnes Serbia is between 10. and 13. place on the world wheat export list, depending on the export results.
What can you say about Serbia’s 2019 wheat and corn production and 2019/20 export outlook?
In every presentation of Serbian agricultural production, we always emphasize that Serbian law prohibits the production of GMO products and that we fight for our place at the international market with good quality and competitive prices. Two years ago, at Agro-Logistics Forum in Chisinau, Moldova, the SGS (one of the largest multinational quality control companies) presentation showed the quality of wheat produced in all of the countries of the Black Sea region. By quality of wheat produced, Serbia ranks second behind Russia. It was no surprise to us because we know that we produce less than 10% of total wheat crop where proteins are less than 11%, and as much as 60% of total wheat produced in Serbia has proteins above 12%. When it comes to corn on the international market, Serbian corn is known for quality, it is not genetically modified, it is used for human consumption and is especially sought after in the countries of the Far East. This year Serbia had produced about 8 million tonnes of corn and 2.5 million tonnes of wheat. By the next harvest, we expect to export 3 million tonnes of corn and 1 million tonnes of wheat.
Serbia is an important player in the Balkans and has the potential to increase its grain production and exports.
What are the setbacks for Serbia to reach its full capacity?
Serbia produces more grains than it needs and therefore is export-oriented country. Producers have certain advantages and difficulties in their constant struggle to survive and maintain their place at the international market. The advantage are the average yields and quality of products that still allow producers to sell all the quantities produced. On the other hand, the problem is the privileged position of producers in the countries at the immediate vicinity, which are EU members, and whose producers have high subsidies on agricultural production comparing to Serbian conditions. Droughts are also occasional problem in Serbia. During last ten years, we had two droughts, catastrophic one in 2012 when wheat crop was reduced by 50% and also another one with minor adverse effects in 2017. Large Danube, Sava, Tisa and Tamis rivers flow through the Serbian northern province of Vojvodina, which is the main grain production region in Serbia, and is intersected by canals connecting these rivers, but the percentage of irrigated area under grains is only about 1%, which is a consequence of the producers habit and, also, of avoiding additional costs for irrigation systems construction.
What kind of changes have you experienced in the grain industry in recent years?
When it comes to production, we can say that we are working to raise average yields. The fact is that we are satisfied with the average yields, they are at the top for the last three years with 4.6 t/ha for wheat and 7.9 t/ha for maize, but we know it can be even better. The second thing we are working on in Serbia is improving of the storage conditions. Our aim is to keep the quality we produce on the fields in the storage places until final consumption.
During last 10 years, new storage capacities of around 7 million tonnes have been made in Serbia. With the existing 5 million tons capacity of storage places, the conditions for storing of the entire annual production of Serbian grains and oilseeds were created.
Where will be opportunities and regions for Serbia corn and wheat exports?
Serbia exports its grains to three continents: Asia, Europe and Africa. We export symbolic quantities of specialty wheat flours to Australia and North America, but having in mind that those countries are exporters, we do not expect better results there.
We are constantly looking for new markets. During the previous year, we have harmonized the phytosanitary conditions for wheat exports to Egypt. The harmonization of corn export regulations for China is in its final stage and we expect the first quantities to be offered to the Chinese market as early as the beginning of 2020. For Serbian corn is a very interesting market is in Indonesia. We already have inquiries from Indonesia, but the phytosanitary conditions have not been harmonized yet and we expect that to be completed in 2020.
At the end of October, you organized the first Serbia Grain Conference in Belgrade. What was the aim of the conference? What kind of feedback did you receive regarding the conference?
One year ago Food and Agriculture Organization of the United Nations (UN FAO) in cooperation with the European Bank for Reconstruction and Development (EBRD) and the Association of Serbia Grains signed a second Letter of Agreement that continued the institutional, and financial support of the UN FAO to development of this sector of agriculture and trade in Serbia, this time in the framework of a joint project titled “Building Capacity of the Agribusiness Association in the Emerging Markets”. The agreement itself included cooperation in the numerous activities of the UN FAO and the Serbia Grains Association, which both aim at long-term development and improvement of production and trade of Serbian grains and oilseeds. In the frames of the joint project, representatives and members of the Association Serbia Grains participated at the Global Grain Geneva Conference, within the Black Sea Forum, and organized a successful Crop Tour Serbia in June 2019.
The first Serbia Grain Conference was a highlight of this project, having sparked such an interest among market participants, both in Serbia and regionally, that it became a separate project. Republic of Serbia Ministry of Agriculture, Forestry and Water Management recognized the need for investing in long-term development of Serbian grains and oilseeds export through such an event and have supported Association Serbia Grains in the idea of organizing Serbia Grain Conference with the goal that it becomes a traditional event.
Conference Serbia Grain 2019 gathered more than 200 participants including representatives of worldwide national grain associations, Serbian Government officials and representatives, representatives from both international and Serbian grains and oilseeds trading companies, quality control companies, transport and freight forwarding companies and Serbian grain producers, traders and exporters - members of the Serbia Grains Association.
Participants were presented with estimates for the current marketing year for grains and oil seeds in the global market and the latest world market developments by UN FAO and International Grains Council expert speakers. We were honored that Mr. Arnaud Petit, IGC executive director, held one of the opening presentations. Data on the quantities and quality of wheat, corn, sunflower seed, soybeans and rapeseed production in Serbia and export capacities were displayed. Second session was dedicated to future possibilities in grain production, logistics capabilities and disadvantages.
Do you think this conference will be a tradition?
Conference SERBIA GRAIN 2019 proved to be an excellent opportunity for establishing new business contacts and renewing old ones. Association Serbia Grains will continue to do everything needed in order that this event becomes a tradition and gets on an even higher level of organization than the first year.
The Danube waterway is vital for Serbia grain exports. However, logistics problems are limiting the Serbia grain trade. Could you tell us recent investment plans and projects to solve logistics problems?
70% of Serbian grains are exported through the Danube. River transport on the Danube, like anywhere in the world, is not without problems. We can divide problems into subjective ones, which we can influence on, and objective ones that are beyond our influence. Objective ones do not include low water levels in the summer months, which reduces shipping standards and leads to increased costs and occasional suspension of navigation due to ice in the winter months. Subjective problems include the small number of silo in Serbian ports, the clearing of waterways on the Danube, and, what would significantly improve our export logistics - the return of river vessels up to 5,000 tons. Until the 1990s, river-sea vessels were used in regular traffic at the Danube River. Their return would greatly facilitate and reduce transport costs of goods to the ports and end users, which would make our goods more competitive.
Serbia is becoming a member of the International Grain Council. What will IGC membership bring in for Serbia?
The International Grains Council (IGC) is an intergovernmental organization that seeks to further international cooperation in grains trade, promote expansion, openness and fairness in the grains sector and contribute to grain market stability by improving market transparency through information-sharing, analysis and consultation on market and policy developments. The IGC also provides daily export price quotations, and market reports, together with access to its extensive databases, to its member governments. We live in a time when it is very important to have the right information but more importantly to have the right information at a right moment in order to make the right decisions.