Organic Agricultural Production
Organic Agricultural Production
Business Model Description
Produce primary and processed high-valued organic goods which entails highly fertile soil land surface, organic production technology, machinery, and workforce, all supported by long-term contracts with buyers with the fulfilment of the conditions prescribed by the Law on Organic Production of the Republic of Serbia, Codex Alimentarius and EU regulations on control and certification in organic production, processing, labelling, storage, transportation, circulation, import and export of organic products. The result is high-quality organic products of plant and animal origin for domestic use and export.
Expected Impact
Ensure food security while promoting healthy soil and benefiting human and environmental well-being.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Serbia: Vojvodina Autonomous Province
- Serbia: Southern and Eastern Serbia
- Serbia: Šumadija and Western Serbia
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, 10).
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
Organic Agricultural Production
Produce primary and processed high-valued organic goods which entails highly fertile soil land surface, organic production technology, machinery, and workforce, all supported by long-term contracts with buyers with the fulfilment of the conditions prescribed by the Law on Organic Production of the Republic of Serbia, Codex Alimentarius and EU regulations on control and certification in organic production, processing, labelling, storage, transportation, circulation, import and export of organic products. The result is high-quality organic products of plant and animal origin for domestic use and export.
Business Case
Market Size and Environment
USD 50 million - USD 100 million
> 25%
According to the annual rise of organic export in the Republic of Serbia, the CAGR of this indicator was 33% from 2012 to 2020 (22). 99% of produced organic fruit is exported (11).
The value of organic production in the Republic of Serbia based on producer prices in 2019 was USD 41.9 million (37,425,208 EUR). It refers to the value of all organic products of plant and animal origin and fresh and processed products (22) (16).
Indicative Return
5% - 10%
Organic production requires high-quality standards, which significantly increases costs. Those standards require sequential implementation, and the market needs to value the organic products differently enough to compensate for the cost increase. This means an expected ROI of 5-10% (16).
Investment Timeframe
Long Term (10+ years)
The higher costs of organic agricultural production than conventional agricultural production costs result in an investment timeframe of more than 10 years (16).
Ticket Size
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Market - High Level of Competition
Business - Supply Chain Constraints
Market - High Level of Competition
Impact Case
Sustainable Development Need
In 2020, the development of the organic area share was 0.55% in Serbia (23). In the previous 10 years, the arable area increased by almost 472% (22). Around 424,000 ha is unused agricultural land, which is 7% of arable land (24). Uncultivated land is a potential for organic production.
Organic production is a system of sustainable agriculture based on a high respect for ecological principles (22). Serbia has pledged to reduce its GHG emissions by 9,8% by 2030 compared to 1990 (25). In 2019, GHG emission in agriculture was 6.22 million t (26).
In 2022, the Global Food Security Index represented that Serbia is below average in agricultural R&D, volatility of agriculture production, sustainability, and adoption of agriculture water risk and disaster risk management (27).
Gender & Marginalisation
Serbia loses 21,000 ha of soil per year due to erosion caused by intensive use, mechanization, and chemicals. Soil properties have declined, including organic matter content, structure, compaction, contamination, and pH imbalances (41, 42).
The domestic market of organic products is not sufficiently developed, as until now, not enough efforts have been made to educate producers and consumers and promote organic products (1).
The share of women is significantly smaller both among the recipients of incentives for organic production, as well as in the total funding approved for this purpose. Women's lower economic position and financial resources can limit their access to organic products as consumers.
Expected Development Outcome
Organic agricultural production removes the use of all synthetic means for plant protection. It introduces the technology of growing crops according to the principles of organic production, which contributes to the preservation of soil fertility and its physical and chemical properties (43).
Modern agriculture, particularly organic farming, offers excellent opportunities to contribute to mitigating the greenhouse effect by reducing greenhouse gas (GHG) emissions and increasing the soil’s capacity to absorb atmospheric carbon dioxide (31).
Organic agricultural production is flexible, especially when growing autochthonous species, varieties and breeds (more resistant to drought, stress and climate change) (44).
Gender & Marginalisation
Organic agricultural production improves the income and brings new job opportunities of under developed rural areas and small farms (21).
Organic production in Serbia is economically significant and has land that is not contaminated with harmful substances, which can significantly contribute to the development of rural areas (29).
Primary SDGs addressed
2.4.1 Proportion of agricultural area under productive and sustainable agriculture
2.1.2 Prevalence of moderate or severe food insecurity in the population, based on the Food Insecurity Experience Scale (FIES)
2.5.1 Number of plant and animal genetic resources for food and agriculture secured in either medium- or long-term conservation facilities
2.a.1 The agriculture orientation index for government expenditures
7.53 (1'000 ha) in 2017 (32).
14.1% in 2020 (33).
5,588 in 2020 (32).
0.28 in 2020 (32).
N/A
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 national action plan (32).
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
Organic farmers must carefully plan crop rotation and optimal land utilization since they cannot use chemicals. Due to that, diseases like typhoid can spread more quickly in this practice (28).
Impact Risks
By not using pesticides and herbicides, organic farming is usually more labor-intensive, and organic feed costs are higher than conventional, which may prevent some from pursuing such practices.
Lack of professional and educated personnel as well as insufficient financial incentives from the state and relevant institutions in organic production may limit the uptake (12).
Insufficient production of certified organic seeds and livestock and preparations that are allowed for use in organic production may result in lower impact (12).
Impact Classification
What
Organic agricultural production contributes to food security. Organic producers reduce CO2 emissions, and organic production is more sustainable.
Risk
A well-planned and thoughtfully designed organic production have higher initial costs due to labor, and insufficient organic seeds/livestock, as much as deficiency of educated personnel.
Impact Thesis
Ensure food security while promoting healthy soil and benefiting human and environmental well-being.
Enabling Environment
Policy Environment
The strategy of agriculture and rural development of the Republic of Serbia for 2014-2024, 2014 indicates the importance and potential of organic and integral agricultural production (1).
The plan for developing organic production in the Republic of Serbia from 2021-2026, 2021 provides guidelines for the future development of organic production in the Republic of Serbia, defining conditions for the long-term development of the organic production sector (4).
Financial Environment
Financial incentives: Incentives for organic production include payments for crop production, rebates for fuel, and/or fertilizer, and/or seeds, fees for milk premiums, and incentives in animal husbandry, which for a minimum 40% increase concerning the amounts of these incentives (4).
Financial incentives: The Rulebook on the Use of Incentives for Organic Livestock Production, No. 25/2020, defines the maximum amount per beneficiary of around 500,000 USD of incentives (39).
Financial incentives: Rulebook on the use of incentives for organic plant production: 31/2018-75,23/2019-22, 20/2020-22,44/2021-33, 50/2022-4,139/2022-56 defines the maximum amount that the beneficiary of the incentive can achieve for incentives for organic plant production at around 5,800 USD (40).
Regulatory Environment
The Law on Organic Production in the Republic of Serbia, no. 30/10, 17/19-second law, regulates organic production, principles of organic production, control, certification in organic production, labelling, storage, import, and export of organic products (35).
The Rulebook on control and certification in organic production and organic production methods, no. 24/21: regulates the conditions of the control organization for carrying out control and certification tasks in organic production (36).
The Rulebook on the documentation to be submitted to the authorized control organization for a certificate and the conditions and method of selling organic products, no. 88/16 prescribes the documentation to be submitted to the official control organization (37).
EU organic production is regulated by: Council Regulation (EC) No. 834/07 and Commission Regulation (EC) No. 889/08. The aim is to ensure that only high-quality organic products are imported into the EU. Most organic products from Serbia are exported to the EU, USA, and Japan markets (38).
Marketplace Participants
Private Sector
Firms such as Agrounik d.o.o, Blagoflor Bačka Topola d.o.o, Beyond d.o.o, Organic Control System doo, TMS CEE d.o.o, Icebreg Organic Centar, Fortis d.o.o, Ecocet Balkan doo, Bacillomix co. D.o.o, Zdravo Organic doo.
Government
Ministry of Agriculture, Forestry and Water Management, Ministry of Environmental Protection, Provincial Secretariat for Agriculture, Serbian Chamber of Commerce.
Multilaterals
World Bank (WB), United Nations (UN), Food and Agriculture Organisation (FAO), European Union (EU), IFOAM, Codex Alimentarius Commission (CAC), World Business Council for Sustainable Development (WBSCD), SIEPA.
Non-Profit
National Association of Serbia Organika, TERRA'S, ZELENA MREŽA VOJVODINE, GIZ.
Target Locations
Serbia: Vojvodina Autonomous Province
Serbia: Southern and Eastern Serbia
Serbia: Šumadija and Western Serbia
References
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