November 13, 2003
Serbia Poultry and Products Annual 2003
On February 4, 2003 following the adoption of the Constitutional Charter and Implementing Law, the Federal Republic of Yugoslavia was formally dissolved and was renamed to "Serbia and Montenegro". The re-naming reflects the union of the two remaining former republics, Serbia and Montenegro. Yugoslavia transferred all of its rights and duties to the new state union. Thirty federal institutions immediately ceased to exist while seven federal institutions have become Serbian bodies.
According to the Constitutional Chapter the two republics will form a limited union, maintaining separate economic institutions. In the future, Serbia and Montenegro will share joint customs systems and foreign trade policy. Republics will be linked by a small joint administration in charge of defense and foreign affairs. Serbia and Montenegro will participate jointly in international financial organisations, the World Trade Organisation (WTO), and in negotiations with the European Union (EU).
The Republic of Serbia legally includes the provinces of Vojvodina and Kosovo. However, on a practical level, there are currently three separate customs zones with different regulations:
- Republic of Serbia (including Vojvodina, but not Kosovo).
- Republic of Montenegro.
- Kosovo Province, where the UN together with the provisional local government, has established customs and tariff codes.
The Serbia and Montenegro tariff schedules were harmonised as of August 15, 2003, except for tariffs of 56 agricultural commodities. Kosovo has separate customs arrangements. Final agreement between Serbia and Montenegro on harmonisation of customs tariffs on all agriculture commodities is to be reached within the next 3-5 years. In the same period, the economic systems of the joint state of Serbia and Montenegro will be harmonised to EU standards.
Production (broilers, processed chicken products, turkey, and eggs)
Serbia and Montenegro poultry production has decreased in the first 6 months of 2003 compared with the same period in 2002. Total poultry production in 2003 is expected to be 65,000 MT, a decline of 10 percent from 2002 production of 72,000 MT. Lower production is producers' response to lower poultry prices brought about by large stocks carried over from last year. Carryover stocks have been retailed this year as semi-frozen product.
The poultry industry in Serbia and Montenegro continues to restructure, with ongoing privatization in the processing industry and consolidation of small poultry farms.
During 2002 and 2003 the poultry industry in Serbia was dominated by two broiler and processing companies, one private and the other State owned. Agroziv, is a private, vertically integrated company from East Vojvodina. Agroziv will likely account for almost 51 percent of poultry production this year. The Topiko Company is currently the second largest poultry producer/processor in Serbia. Although still State-owned, final privatization of Topiko is expected by the end of 2003. Topiko will likely account for about 15 percent of Serbian poultry production this year.
Currently, there is only one commercial turkey production company in Serbia. The Srbokoka Company is located in Jagodina (in Central Serbia), and processes about 100,000 turkeys annually. In North Vojvodina it is traditional for turkey production to take place on small private farms, with on-farm consumption only.
Egg production in 2003 is expected to be about 145 million dozen. In the first 6 months of 2003, egg prices increased by more than 50 percent (from 2.5-3.5 din/dozen to 4.5-5 din/dozen), due to drought-affected grain prices, which have averaged 20 percent above prices last year.
Trade
Officially, imports of poultry (meat and products) have been liberalized, and are no longer subject to licenses or quota systems. Poultry imports (all chicken meat and products, and turkey meat and products) are subject to a tariff of 30 percent, plus a 0.5 percent customs fee on the product value. Additional poultry duties are also in place. The additional duties were increased in April 2003. Import duties for eggs are 5.5-30 percent plus 1-1.5 dinars/dozen.
Poultry imports in January-June 2003 were 677 MT, down sharply from the same period in 2002 when imports were 4,837 MT. Lower imports are the result of GOS efforts to provide stronger protection to domestic poultry producers by imposing additional import taxes. (See Duties and Sales Tax section, below) Most imported poultry products this year are being sourced from the EU (the Netherlands, Belgium, and Germany), rather than from traditional suppliers in Hungary and Slovenia.
Serbia and Montenegro are not significant exporters of poultry products. In the first six months of 2003 total exports of 2,000 Mt were shipped to Macedonia. Serbia and Montenegro currently do not meet EU standards and are thus barred from exporting poultry products to EU members.
Imports of U.S. poultry products to Serbia and Montenegro were suspended in 1999 and are still banned. Serbian and Montenegro Veterinary Authorities are not accepting USDA/FSIS Veterinary Export Certificate 9060. After re-organization of the Republic Government, FAS Belgrade initiated a new round of negotiations with Serbian and Montenegro authorities for accepting U.S. export certificate.
Currently Montenegro is allowing transit of poultry products from the Port of Bar through its country territory to Kosovo, Albania and Macedonia. For such transit, U.S. companies must request transits permit from the Montenegro Ministry of Agriculture, or contact the FAS Office in Belgrade for further information.
Duties and Sales Taxes
In 2002, imported poultry (whole, frozen chicken) cost about 20 percent more than domestically produced poultry meat. As of April 30, 2003 (Official Gazette No.45), levies on imported poultry meat and products were raised from 21-34 dinars/kilo (depending of the type of imported product) to 31-50 dinars/kilo. The effect of this protective measure has been to increase the prices of imported poultry products by 40-50 percent. Imported poultry products are no longer price competitive with domestic products.
As of August 15, 2003 Montenegro is applying a new customs tariff code, harmonized with Serbia's code. A new tariff for poultry meat of 30 percent plus 1 percent as a customs registration fee is being assessed. Montenegro is not applying additional levies on imported poultry products.
Serbian sales tax on all retail prices of most goods is 20 percent. In 2002 sales taxes were removed from fresh and frozen poultry meat, and eggs. The sales tax is still charged on processed poultry products. The government action exempting poultry meat and eggs from sales taxes was intended to reduce retail poultry and egg prices for local consumers. The effect of the exemption however, has been to reduce wholesales prices of domestic products. This means that the sales tax is paid only on poultry products that are mostly imported. Montenegro has a value added tax of 17 percent. The VAT in Montenegro is charged on all sales prices of poultry, products and eggs.
Marketing
Consumption of poultry meat, products and eggs continued to rise in 2003. Per capita poultry meat consumption increased to 8.5 kilograms, which is 6 percent higher than in 2002. Beef and pork remain traditional meats in the Serbian diet. Red meat consumption increased almost 10 percent in 2003 because of the record low prices due to over-supply. Poultry meat consumption in Serbia and Montenegro --at 8.5 kg/per capita-- is still very low compared to EU consumption at 35 kg/capita annually or U.S. 54 kg/per capita annually.
With slightly larger average income of 200 USD/month, consumers are shifting from whole chickens to chicken leg quarters, de-boned breast meat, half-chickens, and frozen poultry products, such as burgers and fingers. With the new-presence of large foreign supermarket chains (Mercator and Super Vero) ready-to-cook/grill cuts of poultry meat are being introduced with good success. Supermarkets are also offering chicken and turkey burgers, fingers, nuggets and processed products. Turkey and chicken processed products are imported, from Germany, Holland, Spain, Slovenia and Hungary. Frozen poultry meat is offered by local and foreign companies and consumed more by urban consumers. Frozen, domestic poultry products (whole and cuts) are usually 10 percent cheaper than fresh poultry. Imported frozen poultry are 50 percent more expensive than domestic fresh poultry due to the recently imposed import taxes.
Serbian and Montenegro consumers have been used to buying only fresh poultry meat (90 percent), and very few processed products and frozen poultry (10 percent). With the ongoing change in living standards, and urbanization of the Serbia-Montenegro culture, it is likely that more frozen poultry cuts (chicken leg quarters) ready for cooking/grilling will be demanded in the future.
U.S. poultry products are largely unknown to Serbian consumers. Marketing opportunities likely exist for U.S. poultry leg quarters however, due to relatively low Serbian incomes. But, domestic poultry products are marketed as "hormone, antibiotic and feed-additive free". Also, the availability of imported poultry products is currently limited to large towns and only through big supermarket chains that target higher-income consumers. Major competitors of U.S. poultry products would likely be Holland, Germany, Slovenia, Belgium and Hungary. All potential U.S. exporters of poultry meat to Serbia and Montenegro should contact FAS office Belgrade to receive news regarding acceptance of FSIS certification by the Serbia and Montenegro Veterinary Service.
Source: USDA
