Fresh Fruit & Vegetable Primary Production
Fresh Fruit & Vegetable Primary Production
Business Model Description
Build and operate the integrated fruit production facility with inputs such as land, CAPEX for production machinery, labor, and seeds and fertilizers. The targeted export markets include export to the European Union (EU), Central European Free Trade Agreement (CEFTA), European Free Trade Association (EFTA), and the Russian Federation supported by long-term contracts. Foreign experts should help in the establishment of cooperatives, in terms of the necessary knowledge and experience of organizing into cooperatives small and fragmented producers who lack negotiating power and respect the "3K" principle (quality, quantity, and continuity), which are needed to collect fruits from small producers in distribution centers. Such centers should have equipment for cooling and calibration with advanced technology. Production yields can be increased thought irrigation systems, and greenhouses add to the resistance and secureness of the crops in different weather conditions.
Expected Impact
Support sustainable farming, promote high-value markets, reduce undernourishment, and ensure food security.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
Disclaimer
UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.
The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.
Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.
Country & Regions
- Serbia: Šumadija and Western Serbia
- Serbia: Southern and Eastern Serbia
- Serbia: Vojvodina Autonomous Province
- Serbia: Belgrade Region
Sector Classification
Food and Beverage
Development need
The share of the Agriculture sector was 6.3% of Serbia's GDP in 2020, but food security for all of the population is not yet been achieved. Observing the progress in SDG 2, Serbia is moderately improving but still has significant challenges, namely in food security (5, 6, 7). Serbia is in 61st place out of 113 countries by the Food Security Index.
Policy priority
Serbian policy documents that are prioritizing the potential of the agricultural sector are the Keynotes of the Prime Minister, the Agriculture and Rural Development Strategy, the National Program of Rural Development, and the Strategy of Smart Specialization of Serbia (1, 8, 9, 30).
Gender inequalities and marginalization issues
Only 15.9% of women run the agricultural company (single unit both technically and economically, operating under a single management); they make decisions about the organization of agricultural production on the agricultural company. Women are rarely permanently employed on the agricultural company, while most often, they are an informally engaged labor force of farming activities (2). Rural areas suffer the consequences of demographic decline. This is the reason for their developmental lag, deprivation, and growing poverty. Rural areas face lower-quality jobs supply, mainly in the agricultural sector (1).
Investment opportunities introduction
The Government's aims are the reduction of lagging in technological development behind competing countries and effective coping of the agricultural sector with the effects of climate change, improvement of the business environment for farmers and entrepreneurs (3), and promoting value-added food through knowledge-based partnerships (1).
Key bottlenecks Introduction
The main disadvantages of the sector are the fragmentation of property, unorganized legislation (primarily ownership relations), absence of information databases, insufficient application of available technologies, insufficient horizontal and vertical integration in the food chain, low efficiency of systems for logistical support to the agricultural sector (1).
Food and Agriculture
Development need
According to the Global Food Security Index in 2022, Serbia faces challenges in the volatility of agricultural production due to a lack of infrastructure, the prevalence of food security in the adult population, and early-warning measures for climate change (1, 6).
Policy priority
The focus areas of the Agriculture and Rural Development Strategy are the improvement of agricultural infrastructure, development of market chains and logistical support to the sector, and improvement of product quality and safety (1).
Gender inequalities and marginalization issues
Women equally participate in fruit picking but feel burdened by unequal workload. Rural areas suffer from demographic drain, developmental lag, poverty and reliance on agriculture-based economy with limited job opportunities and external income. Natural resources are exploited, depleted and degraded (1, 8).
Investment opportunities Introduction
The aim of the Agriculture and Rural Development Strategy is the growth of areas under plantations, expansion of the irrigated and drained land area, increase in the export value of agricultural and food products per hectare of used agricultural land, and an increase in agrarian areas under organic production (1).
Key bottlenecks introduction
Lack of financial capital and challenging opportunities to invest in improving agricultural equipment, buildings, and mechanization are among the key bottlenecks in food and agriculture (1).
Agricultural Products
Pipeline Opportunity
Fresh Fruit & Vegetable Primary Production
Build and operate the integrated fruit production facility with inputs such as land, CAPEX for production machinery, labor, and seeds and fertilizers. The targeted export markets include export to the European Union (EU), Central European Free Trade Agreement (CEFTA), European Free Trade Association (EFTA), and the Russian Federation supported by long-term contracts. Foreign experts should help in the establishment of cooperatives, in terms of the necessary knowledge and experience of organizing into cooperatives small and fragmented producers who lack negotiating power and respect the "3K" principle (quality, quantity, and continuity), which are needed to collect fruits from small producers in distribution centers. Such centers should have equipment for cooling and calibration with advanced technology. Production yields can be increased thought irrigation systems, and greenhouses add to the resistance and secureness of the crops in different weather conditions.
Business Case
Market Size and Environment
< USD 50 million
5% - 10%
Fruit plantations: 5.1%, Vegetables: 1.8% of arable land; potential underutilized (13, 18).
In Serbia, there is a good quality and structure of the soil for growing primarily apples, blueberries, raspberries, plums, and partly also cherries, peppers, carrots and onions. Given that individual plots are insignificant, and that the average investment is 10,000-60,000 USD/ha depending on the culture, the potential market is less than 50 million USD (16, 22).
Serbia has good natural potential in terms of land for primary fresh fruit and vegetable production. Based on interviews with the Association of Manufacturers from Vojvodina AP, the CAGR of revenue of average company in primary fresh fruit and vegetable production in last 5 years is < 10% (16).
Indicative Return
ROE: 10% - 15%
By looking at the business financial statements of over 300 companies registered in the Serbian Business Registers Agency producing fresh fruit and vegetable, the team determined the value of ROE of 10-15% (15).
Investment Timeframe
Medium Term (5–10 years)
For fresh fruit and vegetable export, foreign cooperatives are needed to collect fruits from small producers in distribution centers. Such centers should have equipment for cooling and calibration with advanced technology. The payback period of this IOA is in 5-10 years based on consultations (22).
The payback period is 5 to 6 years. Producers who do not have a cold store make a profit of 8,000-12,000 EURO/ha, depending on yield, quality, variety and price. A yield of 55-60 t was calculated here. Some companies achieve an average yield of 75-80 t (13).
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Market - High Level of Competition
Market - Highly Regulated
Impact Case
Sustainable Development Need
Agriculture constitutes 6.3% of Serbia's GDP, but food security for all households still needs to be achieved. Serbia ranked 61st in the Global Food Security Index 2021 with a total score of 61.4 out of 100 among 113 countries (5, 6).
The Global Food Security Index 2021 demonstrates a performance below the regional average in agricultural research and development, volatility of agricultural production, food security and access policy commitments, the health of rivers, and disaster risk management for Serbia (5).
In the export structure of agricultural products from Serbia in 2018, fruits and vegetables are in first place with 23%. Orchards in Serbia occupy about 183,602 ha, or 4.8% of the total agricultural land, which is small considering the favorable climatic and soil conditions (13).
Gender & Marginalisation
Women are rarely employed full-time in the agricultural companies, while most often, they are an informally engaged labor force doing agricultural work (4).
There are two women’s agricultural cooperatives at the national level, but they cannot boast great business success. Although there are no formal obstacles for rural women to form associations, there are pressures in society that are sometimes so strong that women withdraw and give up (2).
Expected Development Outcome
Fresh Fruit and Vegetable Primary Production increases the quantity and quality of the products, domestic production competitiveness, increase employment opportunities, and export (27).
Gender & Marginalisation
Fresh fruit and vegetable primary production increases employment opportunities for the rural population, lowers the burden on women, maintains rural areas, and prevents population migration to urban areas (27).
Fresh fruit and vegetable primary production benefits women, who are more likely to engage in fruit and plant production. Higher aid intensity is provided to agricultural holdings operating in areas with difficult working conditions in agriculture, to agricultural holders up to 40 years of age and women. Most women-entrepreneurs in rural areas own small or medium-sized farms and they are mostly engaged in food production rather than food processing, which is dominated by large monopolies.
Primary SDGs addressed
2.1.2 Prevalence of moderate or severe food insecurity in the population, based on the Food Insecurity Experience Scale (FIES)
2.2.1 Prevalence of stunting (height for age <-2 standard deviation from the median of the World Health Organization (WHO) Child Growth Standards) among children under 5 years of age
2.a.1 The agriculture orientation index for government expenditures
14.1% (2020) (40).
5.4% (2019) (40).
0.28 (2021) (40).
N/A
N/A
N/A
12.1.1 Number of countries developing, adopting or implementing policy instruments aimed at supporting the shift to sustainable consumption and production
1 policy (25).
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Outcome Risks
There is a risk of potential pest damage (e.g., insects, diseases, mammals, birds, weeds). However, pest pressure varies by fruit and vegetable crop (26).
Impact Risks
Adverse weather conditions (hail, drought, frost, or extreme heat and cold) could affect the yields of fruit and vegetable production (26).
An insufficient quantity of water in higher water stress periods (external risk of bad weather) may pose an obstacle to fruit and vegetable production (34).
Potential unproficiency of fruit and vegetable growers may risk poor input timeliness and quality (26).
Impact Classification
What
The primary production of fresh fruit and vegetable contributes to food security, supports SMEs' incorporation in supply chains and reduces poverty.
Who
Manufacturers, aggregators (with storage capacity), wholesalers, retailers, exporters, and traders in the value chain of fresh fruit and vegetable production.
Risk
Water is crucial for the fresh produce value chain. Businesses, retailers, and consumers need secure and reliable supply. Weather and grower proficiency can affect harvests negatively.
Impact Thesis
Support sustainable farming, promote high-value markets, reduce undernourishment, and ensure food security.
Enabling Environment
Policy Environment
The agriculture and rural development strategy 2014-2024 is focused on the increase in the area under newly planted plantations based on the measures of the Administration for Agrarian Payments (perennial plantations – orchards, vineyards, and others) from 4,000 ha in 2013 to 10,000 ha in 2023 (1).
The Spatial Plan of the Republic of Serbia from 2021-2035 calls for raising fruit plantations in the hilly and hilly areas in the south, west, and east of Serbia, as well as in other suitable agro-ecological terrains, along with the construction of storage capacities and distribution centers (28).
Financial Environment
Financial incentives: The funds of USD 5,9 million for the support for the establishment of multi-year production plantations of fruit trees are non-refundable following the Law on Incentives in Agriculture and Rural Development (29).
Fiscal incentives: For raising production, plantations incentives are determined in 50% of the value of the realized eligible investment, less the amount of funds on behalf of value-added tax (36).
Other incentives: Credit support is a type of incentive that enables access to the use of credit development, e.g., fruit growing, viticulture, vegetable growing, and floriculture. The owner of a family farm can get a loan of up to USD 55,000 and a legal entity of up to USD 165,000 (37).
Regulatory Environment
The Law on Incentives in Agriculture and Rural Development, no. 10/13, determines the scope of funds, types, and maximum amounts for specific incentives to provide stable financial sources for encouraging the development of agriculture and rural areas (30).
The law about food safety, no. 41/09 governs all aspects of production, circulation, control, and food consumption (1).
Rulebook on incentives, no. 41/2021, through support for establishing multi-year production plantations of fruit trees and hops, outlines incentives for agro competitiveness via multi-year fruit tree and hops plantations. It details incentive conditions and maximum amounts per user/type (29).
Law on planting material of fruit trees, vines, and hops, no. 30/2010 regulates the conditions and method of production, trade, and import of planting material for fruit trees, vines, and hops (38).
Marketplace Participants
Private Sector
Companies such as PIK JUŽNI BANAT DOO, TERRA OPTIMA d.o.o, ATOS FRUCTUM DOO, DOO Pan Harvest, FRUEKO DOO, APPLE WORLD DOO, AL DAHRA RUDNAP DOO. Potential foreign investors such as Megatorg LLC, MelodiFruit, JJ GLOBAL TRADER, and PFALZ FRESH GMBH.
Government
Ministry of Agriculture, Forestry and Water Management, Ministry of Environmental Protection, Provincial Secretariat for Agriculture, Water Management and Forestry.
Multilaterals
World Bank (WB), Organisation for Economic Cooperation and Development (OECD), European Bank for Reconstruction and Development (EBRD), Food and Agriculture Organisation (FAO), International Fund for Agricultural Development (IFAD), European Union (EU).
Non-Profit
United States Agency for International Development (USAID), Eko Voće Arilje, VIŠNJA-VOĆE, VIVA VOĆE.
Target Locations
Serbia: Šumadija and Western Serbia
Serbia: Southern and Eastern Serbia
Serbia: Vojvodina Autonomous Province
Serbia: Belgrade Region
References
- (1) Ministry of Agriculture, Forestry and Fisheries - Agriculture and rural development strategy of the Republic of Serbia for the period of 2014-2024, 2014. http://www.minpolj.gov.rs/download/strategija-poljoprivrede-i-ruralnog-razvoja-republike-srbije-za-period-2014-2024-godine/?script=lat
- (2) Situation Of Rural Women In Serbia Report, 2017. https://serbia.un.org/sites/default/files/2019-08/Situation%20of%20rural%20women%20in%20Serbia_ENG_final.pdf
- (3) SEEDEV, Sectoral analysis of production and processing fruit in the Republic of Serbia, 2020. http://www.minpolj.gov.rs/wp-content/uploads/datoteke/IPARD/Sektorsk%D0%B0%20analiz%D0%B0%20VOCE%20060320%20SEEDEV.PDF
- (4) Jefferson Institute, Fresh fruit and vegetables 2006, Competitiveness of Serbian economy, 2006. https://www.files.ethz.ch/isn/46441/Freash%20Fruits%20and%20Vegatables_serb.pdf
- (5) Statistical Office of the Republic of Serbia, GDP, 2020. https://publikacije.stat.gov.rs/G2021/HtmlL/G20211266.html
- (6) The Global Food Security Index 2022, Country profile Serbia. https://impact.economist.com/sustainability/project/food-security-index/explore-countries/serbia
- (7) Country Profile SDG Serbia, 2022. https://dashboards.sdgindex.org/static/profiles/pdfs/SDR-2022-serbia.pdf
- (8) Keynote Address of Prime Minister Brnabic, 2020. https://media.srbija.gov.rs/medsrp/dokumenti/brnabic_ekspoze281020_cyr.pdf
- (9) Ministry of Education, Science and Technological Development, Smart Specialization Strategy 2020 - 2027, 2021. https://prosveta.gov.rs/dokumenti-i-propisi/strategija-pametne-specijalizacije/
- (10) iceberg, About the Company, n.d. https://iceberg.rs/o-kompaniji/https://iceberg.rs/o-kompaniji/
- (11) Republic Press, Budimka Got Owner - ITN group, 2019. https://uzickarepublikapress.rs/budimka-dobila-vlasnika-itn-group-iz-kosjerica/https://uzickarepublikapress.rs/budimka-dobila-vlasnika-itn-group-iz-kosjerica/
- (12) MK Agri, MK group official website, n.d. https://www.mkgroup.rs/nasa-prica/
- (13) Agromedia, 2020. https://www.agromedia.rs/agro-teme/vocarstvo/5-zlatnih-vocki-srbije-ovo-voce-donosi-najvecu-zaradu/
- (14) New Investments Delta Agrar, 2014. https://www.ekapija.com/news/978545/nove-investicije-delta-agrara-vredne-78-mil-eur-od-17-septembra-nova
- (15) Chamber of Commerce of Serbia database https://app.pkspartner.rs/sr/login
- (16) Peterhof Consulting stakeholder consultations online on the 6th of February, 2023.
- (17) Atos Fructum, n.d. http://atos-fructum.com/brendovi.html
- (18) Statistical Office of the Republic of Serbia, Statistical Yearbook, 2022. https://publikacije.stat.gov.rs/G2022/Pdf/G20222055.pdf
- (21) RARIS, Successful examples of Investments from Diaspora, n.d. https://raris.org/index.php/primeri-dobre-prakse
- (22) Statistical Office of the Republic of Serbia, Productive area, output and average yields of orchards, 2018. https://data.stat.gov.rs/Home/Result/13050301?languageCode=sr-Latn
- (23) Companies in fruit and vegetables - import-export, n.d. https://www.europages.co.uk/companies/cat-1-fruits%20and%20vegetables%20-%20import-export/germany/wholesaler/fresh%20fruit.html
- (24) Fruit, edible; figs, fresh or dried exports by country. Fruit, edible; figs, fresh or dried exports by country, 2019. https://wits.worldbank.org/trade/comtrade/en/country/ALL/year/2019/tradeflow/Exports/partner/WLD/product/080420
- (25) One Planet Network, SDG 12 HUB, country profiles, 2022. https://www.oneplanetnetwork.org/country-profiles
- (26) Jon Clements, Extension Tree Fruit Specialist, UMass Amherst. Production Risk Management for Fruit Growers, n.d. https://ag.umass.edu/fruit/ne-small-fruit-management-guide/general-information/risk-management#:~:text=Crop%20Insurance%2FRisk%20Management%20Information%20for%20Fruit%20Growers%201,Risks%20...%205%205%29%20Human%20Resource%20Management%20Risks%3A
- (27) Milić Dušan, Dragan Galic, Veljko Vukoje, Possibilities for improvement of fruit production in Serbia, 2011. https://www.researchgate.net/publication/277124879_Possibilities_for_improvement_of_fruit_production_in_Serbia
- (28) Ministry of Construction, Transport and Infrastructure, The Spatial Plan of the Republic of Serbia from 2021 to 2035, 2021. https://www.mgsi.gov.rs/sites/default/files/PPRS%20Nacrt.pdf
- (29) Planting of new productive perennial plantations of fruit trees and hops, 41/2021. https://preduzetnistvo.gov.rs/programi/poljoprivreda/podizanje-novih-proizvodnih-visegodisnjih-zasada-vocaka-i-hmelja/
- (30) Ministry of Agriculture, Forestry and Water Management, National Program Of Rural Development For The Period 2022-2024, 2022. https://view.officeapps.live.com/op/view.aspx?src=http%3A%2F%2Fwww.minpolj.gov.rs%2Fdownload%2FNPRR-11-mart.docx&wdOrigin=BROWSELINK
- (31) Agros doo, n.d. https://agrosdoo.rs/o-nama-agros-doo/
- (32) Survey on the structure of agricultural holdings, 2018. Fruit growing https://publikacije.stat.gov.rs/G2019/Pdf/G20196004.pdf
- (33) Netherlands soft fruit solutions, 2020. https://www.agroberichtenbuitenland.nl/landeninformatie/servie/nieuws/2020/04/17/netherlands-soft-fruit-solutions
- (34) T.Hess & C Sutcliffe, The exposure of a fresh fruit and vegetable supply chain to global water-related risks, 2017. https://www.tandfonline.com/doi/full/10.1080/02508060.2018.1515569
- (35) Biznis.rs: Farmers opened a joint market to sell their products, 2023. https://biznis.rs/vesti/srbija/poljoprivrednici-otvorili-zajednicki-market-za-prodaju-svojih-proizvoda/
- (36) Rulebook on incentives for programs to improve competitiveness for investments in physical assets of agricultural holdings, 2021. http://uap.gov.rs/pravilnici/mere-ruralnog-razvoja/pravilnik-o-podsticajima-programima-za-unapredjenje-konkurentnosti-za-investicije-u-fizicku-imovinu-poljoprivrednog-gazdinstva-kroz-podrsku-podizanja-visegodisnjih-proizvodnih-zasada-vocaka-i-hmelja/
- (37) Rulebook on conditions and methods of exercising the right to credit support, 2017. http://uap.gov.rs/pravilnici/krediti/pravilnik-o-uslovima-i-nacinu-ostvarivanja-prava-na-kreditnu-podrsku-2/
- (38) The Law about planting material of fruits, vines, and hops, 30/2010. https://www.paragraf.rs/propisi/zakon-o-sadnom-materijalu-vocaka-vinove-loze-hmelja.html
- (39) International Trade Administration | Trade.gov, Serbia - agricultural sectors, n.d. https://www.trade.gov/country-commercial-guides/serbia-agricultural-sectorshttps://www.trade.gov/country-commercial-guides/serbia-agricultural-sectors
- (40) Statistical Office of the Republic of Serbia, SDG Indicators, n.d. https://sdg.indikatori.rs/area/zero-hunger/?subarea=SDGUN020102&indicator=02010201IND01