The citizens of Serbia have no reason to be afraid that there won't be enough food, claims the President of the Chamber of Commerce and Industry of Serbia Marko Čadež. In his interview with Kurir, he explains that lifting the ban on exporting grains, flour, and oil will not lead to disruptions in the domestic market.
"On the contrary, exporting surpluses gives us security over the long haul, not only for this year, but for the next as well. It allows producers to sell their surpluses in foreign markets at good prices, earning funds to finance upcoming sowing seasons, and millers and oil producers to ensure processing continuity," Čadež noted, adding that, unlike many other countries, Serbia is lucky to have considerable amounts to export from its own agricultural production and associated processing, once the domestic population's and food industry's consumption is covered and reserves made for unplanned situations.
"This isn't the case only with grains, but also other basic foodstuffs, such as oil and flour. Even if the export quotas were higher than the approved ones – which is why the CCIS has supported from the start the demands of the producers for free export of end products – the situation would be favourable. This is all the more true in light of the fact that greater surface areas have been used for sowing than before, and that, according to the relevant estimates, we are likely to have a richer harvest than in previous years."
Has the Russian market, which Serbia exports to, stabilized? What is the current state of the product exchange with this country?
"Only the rouble has stabilized in the past two weeks, returning to the pre-Ukraine crisis levels, which is important for the competitive edge of our products in that market. In more general terms, trading with Russia is ongoing, but it's more difficult, primarily due to transportation issues and the uncertainty related to how things will develop in the future. In the first month following the start of the war in Ukraine, the value of our exports to Russia was reduced by a quarter, and the exported amounts fell by 38 percent, compared to March last year. Transporting goods by road is significantly more expensive – 70 to 100 percent more than at the start of the year, and even more for some products. Goods take twice as long than before to reach Russian buyers – even as long as one whole month – with constant route changes and a great uncertainty relating to what trucks can expect at the border crossings from the EU to Russia and Belarus, where they are held up for seven to ten days. Although payment operations still work, albeit often more slowly as a result of stricter controls, each new EU sanction package excludes more and more Russian banks from SWIFT. Because of the impossibility of securing goods during transportation, potential difficulties in collecting payments from companies, and the risk of worsening trade conditions, we advise maximum caution in export activities, especially for greater quantities of goods."
Great news
'Serbia is negotiating with two car-making giants'
There has been talk of an auto giant possibly coming to Serbia. Is that still on the table?
"There'd be nothing better than getting a confirmation that the announced investment will be made by one of the two car-making giants Serbia is negotiating with. That would be great news even in far happier and more carefree times. In a similar vein, Stellantis's decision to invest, manufacture and export electric cars from here is very important not just for the Kragujevac plant, its employees, and suppliers. This decision is important for the future of the Serbian industry, which will be built on new foundations. Serbia will no doubt become one of the European technological hubs, centres of a new wave in the automotive industry, based on cutting-edge technologies, in line with the global trend of moving to the production and use of electric vehicles, which are getting higher in demand."
Is Serbia at risk of foreign investors pulling out if it doesn't impose sanctions against Russia? Are these just threats, or are there concrete announcements?
"As regards the international business community, during the pandemic and the Ukraine crisis, there has been an increased interest in investments and, even more so, in suppliers from Serbia and the region, due to the interruptions in the supply chains and the need to bring production closer and secure procurements. In the past two months, for example, Serbia has seen the previously announced start of the construction of the plants of the German companies Bizerba and Wacker Neuson, the Hungarian UBM Group, and the Turkish Erenli. Stellantis Group, which combines the capacities of Fiat Chrysler and PCA, has signed an agreement with the Government on the investment in electric vehicle production in Kragujevac. The Government is currently negotiating with 86 investors, whose projects would create app. 50,000 new jobs. As for the expectations, messages, or pressure – whatever you may wish to call them – to the effect that Serbia should impose sanctions against Russia, when they do occur, they come from different circles – diplomatic or political – and are directed at the state institutions, i.e. the political decision-makers. Politicians are the ones making the decisions, analysing the consequences of any of them, taking account, among other things, of the economic needs and facts. And it is a fact that the Serbian economy is most closely tied to the European Union. Around two thirds of our total foreign trade is done with the EU. We export an equal share to its market, and nearly 24,000 companies conduct business with the members state partners, employing almost 900,000 people and engaging suppliers, farmers, and collaborators with additional hundreds of thousands of employees in their business operations."
On the energy sector
'After the fault in December, the EPIS is slowly returning to normal operation'
The energy sector has taken a few hits, as a result of which Serbia was forced to import electricity. Will we have enough electricity from domestic production in the coming winter, or will we have to import it again?
"According to the information available to the Chamber, after the fault that occurred in December, the Electric Power Industry of Serbia has been working hard to go back to normal operation, with capacity for lignite production being increased. The import of certain amounts of coal has been agreed, and the thermal energy facilities are being brought back online in a planned fashion. However, it's hard to say at the moment whether and how much electricity will be imported in the coming winter. The summer consumption has in recent years reached the winter months levels. How much electricity is used in the coming winter will depend in part on the prices of gas, mazut, and electricity. If gas ends up being considerably more expensive than electricity, there's a danger of greater electricity consumption and the resultant need for importing electricity. What is certain is that the price of electricity will never again go back to the pre-pandemic levels. The current controlled price, standing at 75 euros per megawatt-hour for industrial use, is hardly sustainable in a situation where it exceeds 300 euros in the stock exchange. That said, an acceptable solution must be found by 30 June in order to avoid a blow that the companies couldn't withstand, and ensure that the economy keeps paying and the EPIS producing and supplying consumers without interruptions."
Germany is Serbia's main trade partner in the EU. Have the relations with Germany changed after the change of government, with Angela Merkel retiring, with whom President Vučić was on very good terms?
"Germany remains our most important economic partner in the world – foremost in terms of total trade volume, our number one export market, and the biggest investor in terms of the number of implemented projects. There are app. 1,000 companies in Serbia which do business with German capital. The German-Serbian bilateral cooperation, both political and economic, intensified and reached peak levels during Chancellor Merkel's term in office. Her departure was a great change in and of itself, both in the German and international political scenes, where she was an absolute authority. What we should keep in mind though is that Germany is the strongest European economy, with a clear economic direction and strong institutions. Moreover, the Serbian-German economic relations have entered a mature phase, so I believe they can only become stronger in the years to come. This is evidenced by this week's conversation between President Vučić and the new chancellor Olaf Scholz. Chancellor Scholz has confirmed the importance of the economic cooperation with Serbia and the desire to strengthen it, as well as – importantly – Germany's open support for Serbia's and the Western Balkans' regional and European integration."
Renewing the agreement on gas procurement with Russia lies ahead. What are your expectations?
"It is clear that the coming winter won't be easy at all in terms of energy, and that the government will have serious negotiations to get a new gas agreement. I believe that the negotiations will result in the best possible arrangement in the existing circumstances."
Kurir.rs/ Boško Vukčević
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