1. Growth scenarios for Serbia compared with EU growth It is leapfrogging time !

2. Leapfrogging Leapfrogging is bypassing stages that others have gone trough. Serbia will bypass stages that EU cooperatives had to go Leapfrogging is a different route of development What Serbia needs is leapfrog politics WHY ?

3. Normal route of development in EU Stage 1 Rural development Stage 2 Econonomies of scale Stage 3 Rebalancing the powers in the food chains Stage 1 Rural development, takes 25 – 50 years in EU Improving local infrastrucrure Improving social capital

4. Normal route of development in EU Stage 2 economies of scale, takes next 25 years, starts in 1950 and still goes on. Step by step getting bigger by Technical Assistance (TA), extension service and research. Stage 3 Rebalancing the powers in the food chain. The power of the retail forces to grow. Driving force: Get more marketpower as producers. Now the most powerful force

5. In Serbia three stages occur at the same time Rural development,(1) growth of producers92) and rebalancing the power in the food chains(3) are all three now taking place at the same time. This is going to be a mess. Most farmers are not ready to jump, most industries are not ready, infrastructure is not sufficient. There will be two groups “the runner ups” and “the laggards” What to do? Analayse The most powerfull driving force is rebalancing the power in the food chain. They need and have turbo power. The biggest producers grow very,very fast. They jump.

6. Concentration proces is speeding up 1950 2000 2025 Nr 1 is 2 times as big as Nr 25 in each chain Nr 1 is 10 times as big as Nr 25 The big producers run the show in the food chain, and they grow fast, they jump. The smaller ones stay more and more behind, they get lost

7. What is leapfrog politics? Be aware that you import knowledge and power from abroad. A minority of your producers are going to make big jumps The leap frogpolitics has to work on three levels Micro, meso, macro You need a masterplan for every important food chain

8. Intermezzo Serbia - Holland Serbia Holland Surface 88.407 41.000 km2 Inhabitants 7.3 17 million Agr. Export 2.7 bill US$ 80 billion Milk per cow 3.000 7.500 Number of cows 600.000 1.5 million Mumber of farms 200.000 30.000 * 77.468 km 2 withouth Kosovo and Metohija

9. EU cooperatives main issues and trends 50% of share in supply 60% of share in collection, processing and marketing Handfull of retailers are the trading partners of 13.4 million farmers: rebalancing the power in the food chain Go to a high level of integration Campina is the biggest with 10 billion turnover, nr 25 has 2 billion

10. Micro – Meso – Macro Micro level: Family farms grow by technological growth (economies of scale) Meso level: Cooperatives grow by concentration processes Driving power: improve market power. Macro level: Governement supports family farms by (1) research,(2) extension services, (3) education. NO industrial farms allowed

11. What lessons can be learned for Serbia? Growth will happen, but crucial is in which way! Everything should be done to improve family farms Everything should be done to stop industrial farms In the supply chains cooperatives should play a very important role

12. Why you need good and enough cooperatives Farmers participate in the development They are IN the process, they have influence. The market and society requires cooperatives. (See EU and the world) If you don’t have good cooperatives a horror scenario wil appear.

13. And another lesson Serbian diairy 2020-2025, Total milkconsumption Serbia goes to 1.750 Mill kg Produced by: each cow 5500 kg, each farm 25 cows, 140.000 kg per farm Then needed 12.500 farms of 25 cows, 5500 kg/cow Dramatic consequences: farmers will be divided in two groups: 12.500 bigger farmers, and 180.000 part time farmers?

14. Major issue The major issue will not be the growth, but how we will grow. Possible scenario’s: Scenario 1. Free growth, market is leading Scenario 2. Guided growth (family farms, cooperatives, and so on) The social impact is the big difference

15. Consequences of free growth Industrial farms take it all Capitalist factories pay low prices to the farmers and high prices to the consumer 100.000’s farmers have a very low income, the villages are getting more poor. People leave the country side Political instability grows quickly

16. Guided growth Micro level: Support only family farms, stop industrial farms Meso level: Necessary is the existence of important cooperatives Macro level: good legislation (support family farms, stop industrial farms; education, research, extensions services) Needed: farmers who establish cooperatives Local and regional initiatives are to be supported

17. And what about Salford Investment Fund or Danube Food Group? Farmerscooperatives should be involved in the milk industries. (establish a cooperative of milksuppliers) They take a few % of the shares (it is still possible now there is a memorandum of understanding between Campina and Salford) They are involved (in all the important decisions) Others can have shares but are not in control, but recieve good interest for the invested capital Campina is leading with involvement of the farmers

18. And last but not least Your governement should make a masterplan for all the important food chains The masterplan for micro, meso and macro level will be implemented directly with involvement of regional initiatives And of course: Support familyfarms and cooperatives. Stop unguided growth by liberal- private and industrial farms abd industries This is necesary to avoid political instability and big social problems