It is known that the milling industry in Macedonia meets nearly 65 percent of the total flour demand in the country. The remaining 35 percent is imported. On the other hand, Serbia has more than 280 mills. 85% of them are low-capacity mills, while the two biggest mills have a capacity of 300 tons per day.
Macedonia, one of Europe's relatively less developed countries, gained its independence 18 years ago; and since then, it changed its planned and central economy to a free market economy and the country is still going through some problems. Thanks to the nomination process for the EU and the macroeconomic stability due to related reforms that are carried out over the past few years, the economic growth and restructuring process in Macedonia are still in progress.
The economic structure of Serbia, a mid-sized market with a population of 7.2 million, undergoes a change from agriculture and industry to service sector like the developed economies. However, it is acknowledged that the agricultural sector in Serbia has a potential in terms of production growth and productivity. In the event that the right policies are applied to the sector in the medium and long terms, the agriculture can play a key role in the country’s economic growth.
GENERAL ECONOMIC OVERVIEW
Macedonia, which is bordered by Serbia and Kosovo to the North, Albania to the West, Greece to the South, Bulgaria to the East, declared its independence from Yugoslavia in 1991. Macedonia's population is estimated to be 2.1 million. The capital city of the country is Skopje. According to the figures in 2015, the country has a population of 961 thousand workable people. 18.3% of this workforce is employed in the agricultural sector, 29.1% work in the industry and 52.6% work in the services industry. Industrial infrastructure is limited to a few investments which were inherited from the former Yugoslavia period.
Serbia is bordered by Hungary to the North, Bosnia-Herzegovina and Croatia to the West, Macedonia and Kosovo to the South, Romania and Bulgaria to the East. The country is covered with rich forests. Serbia is largely based on a transitional economy dominated by market forces. On the other hand, the state sector in the economy still dominates a wide range and many structural reforms are needed. The Serbian economy is mainly based on exportation and the manufacturing sector which is supported by foreign capital. The financial crisis in the world disrupted the structural economic reforms that are needed for a long-term development of the country. Yet, Serbia tries to resolve these problems gradually. The distribution of GDP by the sectors in 2014 is estimated as follows: agricultural and livestock sector by 8.2%, industry by 36.9%, services sector by 54.9%.
THE PLACE AND IMPORTANCE OF AGRICULTURE
The agricultural sector traditionally holds an important place in the economy of Macedonia. On the other hand, the climate and soil structure of the country is very suitable for agriculture. When we consider the fact that the arable areas in Macedonia are not contaminated and tired, the importance of the agricultural and livestock sector is increasing more and more. The agricultural sector constitutes up to 10.2% of GDP and includes 18.3% of the active population. Its main agricultural products are rice, cotton, tobacco and various fruits. Sheep and goat husbandry is just as important.
Agriculture in Serbia is still the basis of the economy and the most important sector in the development of rural areas. 44% of the population in the country live in rural areas and 24% of this population make their living from agriculture. The agricultural sector in Serbia formed 7.9% of the GDP in 2013. At the same time, the agricultural sector is the only sector which provides a positive balance of foreign trade in Serbia’s economy. The most important agricultural export commodities are corn, sugar, wheat and sunflower oil. Nearly 60% of the agricultural areas are used for cultivating corn, wheat, barley, sunflower, soybean and sugar beet products. The agricultural sector is concentrated in the region of Vojvodina, located in the north of the country, and 84% of total production is carried out here. Serbia has a total of 4.2 million hectares arable lands and 90% of these lands belong to the individuals.
GRAIN PRODUCTION AND CONSUMPTION IN MACEDONIA
When the data from U.S. Department of Agriculture Foreign Agricultural Service (USDA FAS) is examined, it is inferred that the wheat has the highest proportion in the grain production of Macedonia. The wheat production by Macedonia between the seasons of 2006/07 and 2016/17 ranges around 200-300 thousand tons. In 2006/07 season, Macedonia produced 293 thousand tons of wheat; the production was declined to 256 thousand tons in 2011/12 season. In 2012/13 season, wheat production decreased to 215 thousand tons and started to increase by the following seasons. According to the data of USDA, wheat production which was 250 thousand tons in 2015/16 season is expected to increase until 2016/17 season and reach at 300 thousand tons.
Macedonia’s wheat consumption ranges around 300-400 thousand tons between the seasons of 2006/07 and 2016/17. The wheat consumption increased to 440 thousand tons in 2008/09 season; and then the consumption decreased to 375 thousand tons in 2012/13 season and increased to 400 thousand tons in 2014 season. Data of USDA, the amount of wheat consumption which was recorded in 2015/16 season and 2016/17 equals to 405 thousand tons.
The second most important product in the grain production of Macedonia is the corn. Corn production in 2006/07 season was recorded as 147 thousand tons. Although the amount of production was increased to 158 thousand tons in 2009/10 season, it started to fall since then and became 119 thousand tons in 2012/13 season. The corn production has also been recorded as 119 thousand tons in the later seasons and this is slightly less than the consumption amount. Corn consumption was recorded as 225 thousand tons in 2006/07 season and then it decreased to 175 thousand tons in 2012/13 season. Data of USDA shows that corn production of the country continues on nearly the same level.
Another important grain product in Macedonia is barley. Between the seasons 2006/07 and 2016/17, a regression was observed in barley production. The amount of production reached over 100 thousand tons between the seasons of 2006/07 and 2011/12; and beginning from 2012/13 season, the production was recorded as 90 thousand tons. As for the consumption, the figures were above 100 thousand tons until 2011/12 season; yet consumption rate was recorded as 90 thousand tons beginning from 2012/13 season as in the production amount. In 2016 season, some increase to be realized and barley consumption will reach at 100 thousand tons.
GRAIN PRODUCTION AND CONSUMPTION IN SERBIA
According to data from the USDA FAS, the leading grain product in Serbia is the corn. Corn production was actualised above 6 million tons between the seasons of 2006/07 and 2011/12; this amount was declined to 3.7 million tons in 2012/13 season. Corn production was increased to 5.9 million tons in 2013/14 season and 7.7 million tons in 2014/15 season. Then it regressed to 6 million tons in 2015/16 season and was recorded as 7 million tons in 2016/17 season. It is expected that it will be 7 million tons in 2016/17 season. Approximate figures are observed in corn consumption. The consumption rate was around 4-5 million tons between the seasons of 2007/08 and 2011/12. In 2012/13 season, it regressed to 3.5 million tons and it became more than 4 million tons again since 2013/14 season. Corn production which was recorded as 4.5 million tons in 2015/16 season is expected to stay around the same level in 2016/17 season. The recorded corn production in 2015/16 season and 2016 equals to 4.5 million tons.
The second leading grain product in Serbia is the wheat. Wheat production during the seasons of 2006/07 and 2012/13 was recorded at a range between 1.6 and 2.1 million tons. Wheat production was increased to 2.7 million tons in 2013/14 season; it was recorded as 2.4 million in 2014/15 season, 2.6 million tons in 2015/16 season; it is expected to increase a little and reach at 2.5 million tons in 2016/17 season. Proximate figures are applicable in wheat consumption. With a consideration of the consumption data for the last ten seasons, it is observed that Serbia has consumed wheat at a slightly ranging amount of 1.5 and 1.7 million tons. Wheat consumption in 2014/15 season equals to 1.5 million tons, 1,6 million tons in 2015/16 season. The wheat consumption in the country is expected to continue to increase in 2017/18 season and stay at 1,8 million tons.
Another important grain product in Serbia is the barley. Barley production ranges between 200 thousand tons and 400 thousand tons. The lowest amount in barley production was actualised in 2010/11 season with 244 thousand tons. The highest amount is expected to be succeeded in 2016/17 season with an amount of 400 thousand tons. The figures in barley consumption are close to the figures in production. The consumption amounts of the last three seasons can be indicated respectively as follows: 325 thousand tons (2013/14), 315 thousand tons (2014/15), 340 thousand tons (2015/16) and 340 thousand tons (2016/17). The consumption amount is expected to be the same in 2016/17 season.
GRAIN TRADE IN MACEDONIA
Grain production is gradually becoming insufficient in Macedonia and the production is not enough to meet domestic demand; so the grain importation increases with every passing season. Accordingly, the most traded grain product in Macedonia is the wheat. Wheat importation has been realised above 100 thousand tons since 2007/08 season. The highest import rate was achieved in 2012/13 season with an amount of 217 thousand tons. Despite the regression in export rates since then, the importation reached to 150 thousand tons in 2015/16 season. The amount of imported wheat in 2016/17 season is expected to be equal to 135 thousand tons.
Another important grain product in Macedonia’s grain trade is the corn. Corn importation was ranged below 100 thousand tons between the seasons of 2006/07 and 2016/17. Corn importation was recorded as 44 thousand tons in 2013/14 season. It increased to 54 thousand tons in 2014/15 season and reached to the highest volume in the ten seasons in 2015/16 season by an amount of 75 thousand tons. The imported corn in 2016/17 season is expected to be equal to 60 thousand tons.
GRAIN TRADE IN SERBIA
Serbia's grain trade centres upon corn and wheat export. Grain imports are quite low in Serbia and the most exports product is the corn. Corn importation reached over 1 million ton in 2008/09 season and then 2.3 million tons in 2011/12 season. Despite the decline in the next two seasons, corn importation reached to the highest rate in 2014/15 season by 2.9 million tons. Corn import was recorded as 1.7 million tons in 2015/16 season, and this amount is expected to increase to 2.2 million tons in 2016/17 season.
There is an observable increase in wheat exportation in the last 10 seasons. Wheat exportation reached to 688 thousand tons in 2012/13 season and achieved the highest level in 2013/14 season by 1.1 million tons. Wheat exportation regressed to 593 thousand tons in 2014/15 season; yet it reached to 950 thousand tons in 2015/16 season. It is also expected to reach 1 million tons in 2016/17 season. As for the corn and wheat importation, considerably low numbers were observed and importation rates fall behind 13 thousand tons in the last three seasons.
FLOUR INDUSTRY IN MACEDONIA AND SERBIA
It is known that the milling industry in Macedonia meets nearly 65 percent of the total flour demand in the country. The remaining 35 percent is imported. It also indicates that the millers in Macedonia work with a capacity of 65 percent. It is known that nearly 60 percent of the processed wheat by the domestic millers is imported. The analyses state that the biggest problem in the industry is the lack of competition. The inability to compete with imported flour prices might be an example. The price of imported wheat occasionally approximates to the price of imported flour; this creates serious concern in the milling industry.
According to the data from Mlinpek Zavod, one of the important representatives of the milling and bakery industry in the country, Serbia has more than 280 mills. 85% of these are low capacity (less than 1.5 tons/hour) mills, but the two biggest mills have a capacity of 300 tons per day. Serbia produces nearly 2 million tons of wheat per year to be used within the borders of the country. From time to time, Serbia imports high quality wheat from Hungary and Austria. Serbia processes 1.2 million tons of wheat every year and produces 860 thousand tons of flour.