The overall objective of the F&B Programme is to support selected value chains within the fruit and berry sector to contribute to: i) the preparations for EU accession, ii) the strengthening of a sustainable growth of the private sector in the districts, iii) increased export, iv) income generation, v) job creation, in particularly among youth and women, vi) reduced migration from the districts. Based on the review of programme documentation and interviews with key stakeholders, the evaluation team has established a Theory of Change (ToC) for the value chain development interventions supported through the F&B Programme (Figure 3.1). It is obvious from the figure, that the GoS and public institutions were expected to play a key role in the implementation process.
Figure 3.1: Theory of Change
Some of the initial assumptions of the F&B Programme have caused serious challenges during the implementation period:
- Interest/incentives to apply for grants: Initially, there was reluctance among farmers to apply for the grants, mainly due to a deeply rooted mistrust to the GoS institutions and system. Not least through the involvement of the local consultants (see below) it became possible to gradually convince the farmers that this was not a “typical” GoS grant scheme, but that they could actually expect to receive the funds from the F&B grant scheme.
- Interest/incentives among farmers to form associations/cooperatives: As discussed elsewhere in this report, despite strong and continued efforts by the F&B Programme it has not been possible to convince farmers of potential benefits from establishing cooperatives and associations. As a consequence of this, the farmers are still the weak part (price takers) in negotiations with traders and owners of cold storage and processing facilities. Likewise, the efforts by the F&B Programme to encourage standardization and certification of the farmers (required e.g. for export of fresh F&B) have become more difficult due to the relatively high costs related to these processes. Despite these organisational shortcomings, it has been possible to raise income, production and employment levels significantly in the short-term. However, in the medium to long-term the lack of organisation of the farmers could become a critical factor.
- Sufficient capacity within the GoS to handle the grant scheme: In the first two years of programme implementation, limited capacity and interest within the GoS to ensure an effective handling of the grant scheme was a major concern for the programme. Frequent changes in MoA management and staff and a general lack of resources, skills and experience within the ministry, effectively blocked for take-off of the grant scheme up to 2012. And again only by the decision from the F&B Programme to temporary fund three staff members within DAP to fill in most critical staffing gaps to allow for disbursement of the grants. Later on, there have been issues with timely payment of the Serbian contribution to the grants scheme and with the quality of the inspectors that were supposed to undertake control visits at the farms. All together, these issues have resulted in significant delays in programme implementation and accumulated a disbursement pressure on the programme. Due to the delay in grant disbursements, the expected production effects from the programme interventions have been delayed. This, together with the heavy focus by the F&B Programme to make the grant scheme up and running, has made it more challenging for the programme to make notable progress on market development issues.
The evaluation findings show that after 2012, the situation in the F&B sector in south of Serbia has improved significantly in terms of modernization of the equipment, establishment of the new fruit plantations, and increasing capacities of the processors. The opportunities in the export markets for F&B also look promising for Serbia.
Processors in the south of Serbia estimate that through the support from the F&B Programme the capacities for F&B production and processing have increased by 20-30% in terms of plantation expansion, new equipment and machinery, cold storage and drying facilities. That provides a good foundation for further development of the sector in the region.
Producers are also optimistic regarding the future of the F&B sector. They expect the sector to grow further, but they are also aware that changes have to happen also at the level of policy, knowing that uncontrolled establishment of plantations will lead to market overload with certain type of fruits. The producers also think that the new law on cooperatives needs to establish a more solid foundation for farmers to associate.
Value chain analysis
Supporting the programme design with value chain analyses worked well, thanks to a thorough report on value chain analysis, which not only highlighted key bottlenecks in the sector, but allowed for modification of already planned activities.
Initially, interventions were planned based on findings and recommendation in the following value chains berries: raspberry, sour cherry, strawberry, blueberry and plums. Later more chains were added: sweet cherries, blackberries and wild collected berries, i.e. blueberries, raspberries and blackberries. Findings of the value chain studies had initiated changes in activities being supported, e.g. in formulating the eligibility criteria for the grants component of the programme. Some examples are: tractors became eligible for support and have been included in first CFA, requirements in terms size of parcels were reduced from 3,000 m² to 1,500 m², the requirement of contributing to the government’s social security scheme was removed from the F&B CFA, which provided equal opportunities for the poorer segments of the farming community which typically do not contribute to the social security scheme.
Value chain selection and marketing pull
Selecting a subsector (F&B) where Serbia had already comparative and competitive advantages combined with high demand has been key to success. The value chain selection was clearly made with marketing pull in mind, targeting international customers with varying degrees of certification requirements (EU, Balkans, Middle East). Serbia has the right agro ecological conditions and extensive experience and to put its F&B products on the market in a time period when neither Poland nor Italy or Spain can do so, filling in a gap in the continuous supply of fruits and berries.
Identifying the possible product/market combinations in the early stage of the programme could have resulted in more success of SMEs accessing markets. While the value chain analyses highlighted the opportunity for Serbia to increase the production of berries as demand is there, the documents available for the evaluation team did not go into identification of a target market, specifics of possible product / market combinations based on customer preferences, determining its characteristics in relation to quality, price, quantity and other important factors, etc. As a whole, market assessment in the initial phase of the programme seems to be weak. Later, the USAID Agribusiness project performed a study of the Russian market. F&B therefore decided to concentrate its efforts on opportunities in Bulgaria and Romania. A market study of the Bulgarian market was started in the fourth quarter of 2013, and the report was published and distributed in May 2014. A market study of Romania, which was considered to be performed in the fall of 2014 was cancelled, due to lack of interest by beneficiaries in the Romanian market in general.
Bottlenecks and opportunities including sector-wide challenges in the wider value chain
In order to assess the bottlenecks and opportunities, the wider value chain framework has been used with its three layers: Business environment, Value chain and VC Service Providers (Figure 3.2). Interventions were identified early in the design phase of the programme covering all three aspects of the three-pronged approach to deal with gaps in the wider value chain.
Figure 3.2: The wider value chain
The F&B Programme was successful in capitalising on a market opportunity and in enhancing sector performance: There are many challenges in a sector, that can be picked up only at sector level (across fruits and berries value chains) such as quality control, risk analysis, monitoring, certification, testing laboratories, setting up berry specific extension service, etc. Obviously, for Serbia there has been a clear sense of urgency due to its accession to the EU: producers are expected to comply with very high standards. The programme design included focus on identification of sector level issues, approaches to solve those issues, and options for embedding the programme in the national context.
As Figure 3.3 below shows, the F&B sector in Serbia exhibits vertical integration characteristics, indicating the need to intervene on sector level if the performance of the whole sector is at stake. The F&B Programme intended to do.
Figure 3.3: Agribusiness sector structure for the fruits and berries sector
Apart from the support from the F&B Programme, most FGD grant beneficiaries found that the final phase of the transition process in Serbia (decline of industry, job losses and economic crisis) was the main driver and one of the most important factors for increasing the F&B production after 2012. The business environment was not favourable for small SMEs in Serbia, so people that owned land realized that relatively small investment in combination with reasonable workload, could bring additional income to their households.
The combination of support elements to value chain actors has been key to success. Many of the beneficiaries received repeated support from F&B in the same element, such as access to finance, or a combination of support elements such as access to finance, technical assistance, marketing assistance and extension service (support with calls). Without support to reply to calls, they would not have been able to access programme finance. Without access to finance, farmers could not have bought equipment to upgrade their production based on the training received during technical assistance. Without technical assistance, they would not have known how to improve their agro technology despite having new equipment. However, the combination of the above made them more competitive in the market.
Value chain service providers
One of the key design features of the programme was outreach and cooperation with other donor projects, Serbian local and national government institutions and agencies, universities and research organisations and private extension services and other organisations providing services to the agricultural industry within the districts and the value chains covered by the programme
The key strategic directions of the F&B Programme were to:
- Coordinate and plan activities in close cooperation with those partners to avoid overlap or duplication of efforts
- Engage in joint activities to ensure the best use of resources and funds, including co-financing of events and to the extent possible and feasible always invite cooperation with other institutions in events and activities organised by Fruits and Berries
- Extend invitations to other donor organisations and service providers for all events and activities organised by the Fruits and Berries Programme
From day one the project staff was keen on establishing cooperation with other donor programs and coordinate activities with other donor organisations. Due to the continuous change of staff at government offices as result of changes on political level, collaboration with those stakeholders remained a challenge throughout the programme.
The State Agriculture Advisory Service (AAS) is providing services free of charge, however the FGD farmers expressed a huge lack of trust in the government, its institutions and agricultural policy, that reflect on also on extension services (blaming advisors for bad policy, unstable market etc.). The AAS has certain quotas to reach related to number of producers with whom they must cooperate. According the FGD participants, AAS advisors tend to select bigger farmers, with whom the cooperation is easier, who often initiate cooperation by themselves, who are more interested in extension support or have more financial means to apply the advised technology or organisation of production or in the worst case just the friends or relatives that could sign them necessary forms.
The F&B programme has been successful in counteracting the layoffs at local extension services on short-term by hiring in some of the staff that was let go to support farmers in writing of proposals. The local municipalities and the local extension services never got the supporting role in the F&B Programme they were expected to play. This created a gap in the planned support to the farmers for accessing the grant scheme. Strengthening of the agricultural extension centres by hiring in additional young agricultural advisors introduced in late 2011 was cancelled, which meant that the staff resources anticipated to work with F&B were cut down significantly.
As reply to the situation, the F&B made a smart move of hiring in – on a short term basis and at municipality level – a number of those redundant young advisors as consultants to assist in the call for grant proposals. The work of these local consultants has undoubtedly been important to reach and support a large number of small F&B farmers through the programme. On the other hand, the sustainability of this model is doubtful. To mitigate the risk, F&B has been exploring candidates for establishing private extension services either as part of cooperatives or as separate entities. As long as the public PSSS offices are financed by the Serbian government and provide their services for free, it will be a challenge to established unsubsidized private extension services.
 Value chain analysis for Southern Serbia, 2012.Top