1. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 11 – Agriculture and Rural Development BEEF AND VEAL SECTOR Sunčica Boljević & Milan Markovic suncica.boljevic@mpr.gov.me Bilateral screening: Chapter 11 Brussels, 11-13. December 2012

2. 2 Presentation outline  General frame for the sector  Primary production  Processing industry  Market of the bovine meat Chapter 11 Agriculture and rural development M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

3. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Legal framework Poglavlje 25 Nauka i istraživanje Law on Agriculture and Rural Development (Official Gazette of Montenegro 56/09) Law on Livestock Farming (Official Gazette of MNE 72/10) Veterinary Law (Official Gazette of Montenegro 30/12) Law on Food Safety (Official Gazette of Montenegro 14/07) Law on Animal Identification and Registration (Official Gazette of the Republic of Montenegro 48/07, 73/10)  Decree on implementation of the agrarian policy measures for 2011 - Agrobudget (Official Gazette of Montenegro 66/11). Secondary legislation (sublaws, rulebooks) Chapter 11: Agriculture and Rural Development

4. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Policy frame for bovine meat production Poglavlje 25 Nauka i istraživanje Strategy ‘’MONTENEGRO’S AGRICULTURE AND EUROPEAN UNION – Food Production and Rural Development (background, objectives, scenarios of development etc) National program for food production and rural development 2009-2013 (the instruments and measures of support, financial framework) Agrobudget – national budgetary support (adopted and published each year consists of the support measures) Sectorial documents (Meat sector study for IPARD, etc) Chapter 11: Agriculture and Rural Development

5. INSTITUTIONAL SUPPORT  Ministry of Agriculture and Rural Development  Veterinary service  Veterinary Directorate (under the responsibility of the Ministry)  Diagnostic vet Laboratory (public body)  Field veterinary service (privately organised)  Biotechnical Faculty - University of Montenegro  The Livestock Selection Service (breeding programs, premimus implementations)  The Dairy Laboratory (analyses of milk for payment purposes)  Livestock Department (education and research)  Other state institutions and organizations  Advisory service at the municipal level Chapter 11 Agriculture and rural development M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

6. AGRICULTURAL LAND AS A GROUND FOR CATTLE SECTOR Chapter 11 Agriculture and rural development M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Total Agricultural land - 516,070 ha Arable land (fields and gardens)44,524 ha Grassland (meadows)128,621 ha Permanent crops16,107 ha Permanent pastures325,436 ha Other2,649 ha

7.  There is no division between dairy and beef production!  Bovine meat comes mainly as a second or side product from milk production  Purebred beef breeds (Charolaise, Limousine, Angus) are not reared at all in Montenegro  Cattle are farmed on more than 50% of agricultural holdings, or on 75% of holdings engaged in livestock production.  Cattle population are farmed on family agricultural holdings (98%) and about 2% are kept by business entities.  The average farm size is only 3 cows, while the number of holdings with more than 3 breeding animals is 4331, with 28337 animals Farm structure in cattle sector M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11: Agriculture and Rural Development

8. CATTLE POPULATION, presented by categories M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Category20072008200920102011 Cattle total (15 th January)109,378106,494100,85395,96387,173 Calves up to 3 months15,87116,29913,63312,046 21,843 Young bulls/heifers from 3 months up to 2yrs 13,8617,0787,6197,855 Young bulls/heifers over 2yrs1,1304,5984,7774,971*** Breeding bulls1,2941,1821,0921,2541,064 Oxen4,0803,8603,2472,5782,188 Cows and in calf heifers73,14273,47770,46767,25962,078

9. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11: Agriculture and Rural Development The structure of the cattle farms (cows and heifers), 2011 Farm sizeNo of farms No of animalsFarm sizeNo of farms No of animals 41217486811-152212754 51047523516-2048834 6695417021-2528634 7435304526-3012336 8314251231-4012411 9165148541-508356 101221220> 507477 4-10399522535 > 10 3365802 Total number of farms above 4 breeding animals is 4331 with 28337 heads The rest of breeding animals (38956 ) are on small farms with 1, 2 or 3 heads Source: Biotechnical Faculty - Livestock Selection Service, Annual report 2011

10. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11: Agriculture and Rural Development Fattening systems of cattle  Locally produced young stock is mostly slaughtered as calves, since calf price is considerably higher than young bull price, and as there is no appropriate domestic feed production for intensive bull fattening.  There are few specialized cattle feedlots.  The biggest feedlot is linked to the Meat processor Mesopromet in Bijelo Polje is as follows:  there are in total close to 2,000 young bulls, 450 at the company’s own farm,  the rest is under contract on family farms (so called “satellite farms”),  Around 60% of animals for slaughtering are imported from Serbia, the rest is ME origin.

11. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11: Agriculture and Rural Development Bovine meat production systems Veal production  Calves are main slaughter category, slaughtered at the age of 3-4 months, with live weight about 100 – 160 kg.  Price for calves is about 2.7 – 3.2 EUR/kg live weight depending on the quality, higher prices are usually paid for calves of Simmental breed. Beef production from young bulls  Domestic male calves or imported male calves (Simmental breed) are intensively fattened to produce beef of young bulls (“baby beef”).  The fattening period from 140 kg to about 480–500 kg slaughter weight takes about 9 – 10 months, average daily gain of about 1.2 – 1.3 kg, the bulls are usually kept in barns. Other systems  Bovine meat is also produced from culled cows, breeding bulls, oxen in certain regions, surplus heifers which are not needed for reproduction

12. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11: Agriculture and Rural Development Slaughterhouses  The highest percentage of cattle is slaughtered at several rather big companies that integrated slaughtering and processing plants.  Four biggest meat industries (MESOPROMET Ltd. Bijelo Polje, GORANOVIC in Nikšić, GRADINA Ltd. in Rožaje and PANTOMARKET Group) covers 2/3 of the total national meat processing,  These medium-sized companies (in EU terminology) perform retail selling and export meat to Serbia, Macedonia, BiH and Kosovo.  The companies (3) have submitted the request for approval to export their met products to the EU, no one approved yet  There are 20 small family slaughterhouses which supply local market (e.g. butcher shops, hotels, restaurants) by fresh meat  There are 250 beef meat retailers, bigger supermarkets have their meat sectors or they have business cooperation with slaughtering industry.

13. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11: Agriculture and Rural Development The main entities in bovine meat sector: The main slaughterhouses Company Slaughter capacity /8hrs CuttingProcessingWholesaleRetail MI Goranović160++-- MI Mesopromet150++++ Gradina50++++ MI Point30++-- Golijanin doo10++++

14. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11: Agriculture and Rural Development  Most frequently, slaughterhouses import cattle for slaughter from Serbia imported cattle must be transported directly to slaughter- houses, otherwise they must stay in quarantine and be marked by Montenegrin ear tags.  Systems of purchasing of cattle from domestic production:  direct purchase from the farmers  purchase via so called livestock markets  Bigger slaughterhouses have their own vehicles for transport of animals for slaughtering,  Livestock markets (places for selling live animals) belong to the local municipalities, and local authorities manage and maintain those markets Market tools

15. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11: Agriculture and Rural Development  System for the identification and registration of bovine animals has been implemented since 2007 (Veterinary Directorate is responsible body the whole system)  Carcass classification system is not established in Montenegro yet, however until the accession to the EU at latest, Montenegro will establish the sector- related data gathering system,  Traditional way of purchasing animals for slaughtering prevails, either selling per head or selling based on kg of live weight  National labelling system of beef products is not in line with the EU requirements, however, the rule books from the previous period are in force (The Rule Book on the Quality of Meat of Cattle for Slaughter (OG of SFRY, No. 34/74, 1/81 and 2/85) and The Rule Book on Labelling and Marking Packed Foodstuffs (OG of Serbia and Montenegro, No. 4/04). Market tools

16. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11: Agriculture and Rural Development The prices monitoring on the markets  In 2006, Agrarian Marketing Information System (AMIS) for gathering and disseminating data of agricultural product prices was established  AMIS single internet portal was developed for weekly monitoring of agricultural product prices on livestock markets in the major towns of Montenegro.  System for monitoring prices is not established so far in line with Regulation No. 1234/2008 and Regulation No. 1249/2008 laying down detailed rules on the implementation of the Community scales for the classification of beef, pig and sheep carcasses and the reporting of prices thereof.  Until the accession to the EU at latest, Montenegro will establish the sector-related data gathering system

17. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11: Agriculture and Rural Development The average prevailing prices within livestock markets in 2011: Source: AMIS - http://www.amiscg.org/cijene/php/prcijena_frm.php, http://www.amiscg.org/cijene/php/prcijena_frm.php Category of animalsPrice Calves, 80-160 kg LW (Simmentals):€3.01 Calves, 80-160 kg LW€2.98 Young bulls/heifers, up to 300 kg LW€2.05 - 2,14 Young bulls/heifers, more than 300 kg LW€1.94 Culled cows, kg LW€1.04-1.20

18. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Item20072008200920102011 Net production in tonnes of cwe (estimation) 6,0505,9806,0106,0906,235 Import of live animals, cwe, t 1,0963,8623,2582,9634,720 Import of meat, t 2,3953,9073,8223,3752,309 Import total, t 3,492 7,769 7,080 6,3387,029 Export of meat, t 16 62 105 9560 Public stocks----- Total domestic use, t9,52613,68712,98612,33313,205 Per capita consumption, kg/head/year 14.6521.0619.9818.9720.31 Self-sufficiency (%)63.543.746.349.447.2 Balance sheet for beef and veal sector in head and/or carcase weight equivalent (cwe): BALANCE SHEET FOR BOVINE MEAT, (in carcass weight equivalent - cwe)

19. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 11: Agriculture and Rural Development Import regime for live animals and bovine meat  Montenegro is a member of World Trade Organization:  no quantitative restrictions on import  custom duties: live animal FBR 0-40% start from 2017  custom duties: bovine meat IBR 25%, FBR 35% in 2017.  EU countries – SAA is implemented: tariff rates for live animals and bovine meat are on 50% of MFN.  CEFTA members : import of live animals and bovine meat - full liberalisation  EFTA members: duties on import of live animals and bovine meat from Switzerland and Liechtenstein are at the level of concessions with the EU  Free Trade Agreement with Russian Federation - no duties on import.  Import of bovine meat from Turkey - MFN duties are applied

20. SWOT analyses of the cattle sector Chapter 11: Agriculture and Rural Development Source: MONSTAT Statistical Office, the Statistical Yearbook and Federation of Beekeepers’ Associations of Montenegro Strengths Resources available for fodder production for ruminants; Legal and strategic frame are put in place Weaknesses Small scale production – subsistence farming, Collaboration among farmers is weak; No specialized beef breeds; Inappropriate buildings, mechanization and equipment; Opportunities Bovine meat production based on rearing of beef breeds Improvement of technological level of the existing farms; Support – from national source (MARD) and EU grants - IPARD; Threats Opening of the market can threaten the sectors; Problems in an access to the bank loans; Failure in implementation of CAP-like agricultural policy; Failure in implementation of the strong EU requirements

21. THE MAIN CHALLENGES On the farm level: To improve barns, fodder production, genetics To develop bovine meat on rearing specilized beef breeds To improve skills (management, hygienic standards) On the processing industry level: International standards, including carcass classification To develop better link with farmers Distribution channels and consumer side: To increase public awareness on the importance of local products for the total economy Chapter 11 Agriculture and rural development M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union

22. Chapter 11 Agriculture and rural development M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Thank you for your attention!