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Serbian berry sector needs new approach for fresh market

The Food and Agriculture Organisation (FAO) of the United Nations says creating a platform for exporting berries out of Serbia is providing several challenges, based on the structure of the industry.

Serbia produces between 60,000-85,000 tonnes of raspberries annually and more than 95 per cent of production is exported. Speaking at the Global Berry Congress in Rotterdam, FAO economist Andriy Yarmak says his organisation is working on a project to further add value to international supplies.

"That's a challenge because the Serbian raspberry and blackberry industry has a very unique structure," Mr Yarmak said. "It's based on predominantly a smallholder production, but also on unified technology and varieties, and it's of good quality. But at the moment they are being challenged with very low prices globally for raspberries."

Slobadan Obradovic - Drenovac, Vesselin Djodjevic - Blueberry Club, Milos Milovanovic, FAO Italy, Andrily Yarmak - FOA Italy 

Out of the exported volumes, more than 98 per cent is exported frozen, with minimal amounts sent to the fresh market. It is valued at US$250million and 80 per cent is sent to Western European countries such as France, Germany, Austria, Italy, Belgium and the Netherlands. FAO's International Agricultural Policy Consultant Milos Milovanovic points out that Serbia is the number one supplier of frozen raspberries to Western Europe.

"The EU 15 are buying between US$500-700 million of frozen raspberries per year," Mr Milovanovic said. "So, we are supplying 25-30 per cent, which is a lot."

Mr Yarmak says that the FAO is looking at the situation from two points of view; one, how does Serbia increase value of frozen raspberries and two, can it develop exports of fresh raspberries?

"Exporting fresh raspberries from Serbia seems like a logical step because it is in Europe, it has got a short distance to travel to destinations in the European Union, and there is a lot of value," he said. "However, it is a completely different business, and with so many smaller farmers, or even households, producing raspberries it is difficult to make that transformation happen. There is another opportunity; how do we increase the value of the frozen raspberry? Of course, we can step up marketing efforts and that means doing more promotion and branding for certain raspberries - but I think the global industry could do a little more in promoting this berry to South East Asia."

For example, he says that the FAO previously did some trade missions on behalf of Ukrainian companies to South East Asia, and found the consumers used a lot of berries in products such as smoothies - but restaurants bought berries in bulk from supermarkets and froze them. Mr Yarmak believes this is an opportunity for growth in the frozen berry industry.

Serbian raspberry production was initially driven by high prices, increased yields, and a lot of newcomers to the industry - however Mr Milovanovic points out their involvement was short lived.

"They got into the raspberry business with no previous experience, they have no knowledge and were getting familiar with the sector," Mr Milovanovic said. "Then, unfortunately for everyone, we had a period with low prices and a lot of newcomers have gone in the other direction and left the industry, which is sad, but a lesson learnt and one we want to share with everyone."

He adds that despite the fragmented production, there is concentration and consolation happening at the Serbian buyers’ market, which is leading to less companies, and the top four companies are exporting a quarter of total raspberries. While Mr Milovanovic notes that the varieties that are currently being grown are suited for the frozen market, but in order to transition to fresh supply, it would need a new approach.

"It would also require some investment in cold-storage, and other equipment," he said. "It would require a lot of public investment in infrastructure, and it would require completely different models of export than the frozen berries. It is a very tough task, but it is possible."

Companies are also having to change their approach and evolve traditional models to remain financially competitive. Owner of one of Serbia's leading frozen fruit companies, Drenovac, Slobodan Obradović told the Global Berry Congress that his company has been actively involved in raspberry exports since 2000. But in the last 5-6 years he says there have been many challenges faced by companies across the country, and he’s had to explore some changes.

"We have decided to invest in a completely different idea - that is dry freezing," he said. "It requires a large investment, but we see an opportunity in this area particular segment of the market. We are planning to expand our capacities. We believe that more producers and more raspberry operators should switch to our way of business, because margins that we have seen in frozen raspberries went significantly down, so it very hard to get decent income with these levels of margins. I hope that my colleagues (at other companies) will do their part, because with increased production we also increase capacities. Many of them are in difficult financial situations and it is not sustainable in the long run. So, I think we would all be better off if they follow what we are doing into dry freezing."

Serbia is also involved in blueberry production, but on a smaller scale. The Blueberry Club Serbia's Veslin Djodjevic says the variety of berry is fairly new to the country, and has a growing production area that has now reached 100 hectares. The main season for fresh supply is in June, when Spanish production slows, where Serbia can supply to European and Russian markets. Mr Djodjevic says it has been a learning curve for all members involved in the industry.

"We also have a lot of challenges, mainly because we are doing something that is not common (compared to raspberries) in some regions," he said. "We have problems with how to organise farms, which plants to use, and which substrate to use. We need to speak with blueberry growers from all over Europe, such as the Netherlands, Spain and a lot of other countries. We spoke to other growers and found the best solutions for us. There is a lot of experience and knowledge; that's why we organised the Blueberry Club like a company, which can help and connect growers so we can be stronger together."

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