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Goran ZivkovJune 2017, IAMO, Hale
Export driven competitiveness in Europa and Central AsiaUnderstanding competitiveness concept to increase export
• The world has become a more global. Processes and changes in one part of the world, now don’t have exclusively local effect, but also on places and processes far from that part of the world.
• Global competitiveness distribution. We live in a global world and in such environment real competitiveness advantages of countries in specific areas of production are becoming more and more obvious.
• Countries are becoming increasingly integrated, so regardless of how much the country as a whole, or a certain region or a particular municipality may be specific, it is impossible for its agricultural production, trade and prices to be unaffected by the global and regional trends.
• However, there are reasons why food will continue to be produced throughout the world, the most important of which are:
• Distribution of competitiveness among states does not entirely correspond to relation between certain producers (it doesn’t mean that the worst Dutch producer is better than a good producer from Serbia);
• More competitive countries can never produce everything; • There is considerable production for own consumption which does not include personal
work in the product price; • Lower expectations of producers from less competitive countries; • Preference for local markets and local products; • Many perishable products are not easy transportable • Different trade barriers like transport cost, tariffs,
Agriculture is more integrated and competitive but still there is no country without agriculture Soybean prices in China, Serbia and USA
Maize price USA and Serbia
0
100
200
300
400
500
600
700
2009 2010 2011 2012 2013 2014 2015
Produktna berza CBOT DCE
100
150
200
250
300
350
Jan
Jun
No
v
Ap
r
Sep
Feb
Jul
De
c
Ma
y
Oct
Ma
r
Au
g
Jan
Jun
No
v
Ap
r
Sep
Feb
Jul
De
c
Ma
y
Oct
Ma
r
Au
g
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Mineapolis Novi Sad
World Competitiveness
World share and production growth in relation to the World (2007 – 2014)
Asia is driving world agriculture in production terms
Cereals
Cereals
Cereals
Oilcrops
Oilcrops
Oilcrops
Vegetables
Vegetables
Vegetables
Fruits
Fruits
Fruits
Meat
Meat
Meat
MilkMilk
Milk
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
-5% -4% -3% -2% -1% 0% 1% 2% 3%
Ave
rag
e W
orl
d s
har
e
Average growth in relation to the World
EU Asia USA
Europe is driving World trade of agricultural products but lacking behind World trends
World share and export growth in relation to the World (2007 – 2015)
Meat
Dairy
Vegetables
Fruits
Cereals
Oilcrops
MeatDairy
Vegetables
Fruits
Cereals
Oilcrops Meat
Dairy
Vegetables
FruitsCereals
Oilcrops
0%
10%
20%
30%
40%
50%
60%
70%
80%
-10% -5% 0% 5% 10% 15%
EU Asia USA
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
-4% -3% -2% -1% 0% 1% 2% 3%
Western Balkan CIS NMS EU15 Ukraine Serbia
-0.2%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
-4% -2% 0% 2% 4% 6% 8% 10%
Western Balkan CIS NMS EU15 Ukraine Serbia
Area harvested 2007-2014 Trend of production related to World 2007-2014
Production Growth Base
986.42 mil. $
5.83 bil. $
33.74 bil. $
604.23 mil. $
3.79 bil. $
886.36 mil. $
-0.50%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
-4% -2% 0% 2% 4% 6% 8% 10%
Ave
rag
e W
orl
d s
har
e
Average growth in relation to the World
Export growth in relation to the World 2010-2015
CEFTA NMS EU15 South Caucasus CIS Central Asia
Export Growth
Export trends in selected countries (2010-2015)
GeorgiaAzerbaijan
Kazakhstan
Tajikistan Armenia
Russian Federation
Serbia
Poland
Turkey
Iran
-0.50%
0.00%
0.50%
1.00%
1.50%
2.00%
-10% -5% 0% 5% 10% 15% 20% 25%
Ave
rag
e W
orl
d s
har
e
Average growth in relation to the World
Georgia
Azerbaijan
Kazakhstan
Tajikistan
Armenia
Ukraine
Russian Federation
Serbia
Bosnia Herzegovina
Poland
Turkey
Iran
Export Growth
Export structure (average 2010-2015)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CEFTA NMS EU15 CIS Caucasus CentralAsia
Meat Dairy Fruits Vegetables Cereals Industrial crops
Export destinations (average 2010-2015)
Export structure and destination will change
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CEFTA NMS EU15 Russia Rest of CIS
CEFTA NMS EU15 Russia Rest of CIS Other
1.102.28
93 54 0.491.39
0
5
10
15
20
25
30
35
40N
eth
erl
and
s
Bel
giu
m
Mal
ta
Luxe
mb
ou
rg
Irel
and
Mo
nte
neg
ro
Au
stri
a
De
nm
ark
Ger
man
y
Ital
y
Slo
ven
ia
Po
rtu
gal
Cyp
rus
Un
ite
d K
ingd
om
Fran
ce
Spai
n
Swe
den
Slo
vaki
a
Esto
nia
Gre
ece
Cze
ch R
ep.
Lith
uan
ia
Hu
nga
ry
Po
lan
d
Cro
atia
Latv
ia
TFYR
of
Mac
ed
on
ia
Geo
rgia
Bu
lgar
ia
Serb
ia
Fin
lan
d
Bel
aru
s
Arm
en
ia
Ro
man
ia
Rep
. of
Mo
ldo
va
Ukr
ain
e
Bo
snia
Her
zego
vin
a
Aze
rbai
jan
Alb
ania
Kyr
gyzs
tan
Ru
ssia
n F
ed
erat
ion
Kaz
akh
stan
Tho
usa
nd
do
llars
per
hec
tare
Western Balkan NMS EU15 Rest of CIS Caucasus
Export per hectare (average 2010-2015)
Small processing cause small export per hectare
Competitiveness concept Producer level
How to reduce number of mistakes?
How I can be competitive? EU have subsidies, technology …? YES YOU CAN
100 ha, investment of UAE company
2 ha, investment of SlađanaVuković, financial expert from Island
0.3 ha local producer
Blueberry prices in Serbia
Who is competitive blueberry producer?
0
2
4
6
8
10
12
14
16
Jan
Ma
r
Ma
y
Jul
Se
p
No
v
Jan
Ma
r
Ma
y
Jul
Se
p
No
v
Jan
Ma
r
Ma
y
Jul
Se
p
No
v
Jan
Ma
r
Ma
y
Jul
Se
p
No
v
Jan
Ma
r
Ma
y
Jul
Se
p
No
v
Jan
Ma
r
Ma
y
Jul
Se
p
No
v
Jan
Ma
r
Ma
y
Jul
Se
p
No
v
2010 2011 2012 2013 2014 2015 2016
US
D/k
g
Green market price Wholesale price Export price
Cost of production Marketing
Yield
LaborCost of state
Access to technology
Access to capital
Appropriated technology
Local
Investment
Knowledge
Export
Price Level of technology
Weather
Taxes
Efficiency Transport
Main factors that determine competitiveness
Properly estimating yield level
0
1
2
3
4
194
7
194
8
194
9
195
0
195
1
195
2
195
3
195
4
195
5
195
6
195
7
195
8
195
9
196
0
196
1
196
2
196
3
196
4
196
5
196
6
196
7
196
8
196
9
197
0
197
1
197
2
197
3
197
4
197
5
197
6
197
7
197
8
197
9
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
t/h
a
Serbian 10-year average BiH 10-year average Serbian yield Serbia, first 5 years Serbia, second 5 years
BiH, first 5 years BiH, second 5 years BiH yield Linear (Serbian yield)
Long term predictability is fine Minimising high variation is problem
Wheat yield level in Serbia and Bosnia and Herzegovina 1947-2016
(1) Producers farm gate price, (2) Wholesale price, (3) Unite Value export price, (4) Supermarket purchasing price, (5) Supermarket selling price, (6) Unite Value import price, (7) Green market price …
Predictability of prices • There are many MIS
systems and other access to price information
• Today is possible to predict prices to large extend
There is no one price, (price to specific location at specific market for specific quality (and packaging) proven by specificstandard at very specific time
Price varies
Between year
Time of sale
Point of sale Quality &
Variety
Packaging and labelling
Inflation and depreciation of currency
Price variation are high since
many factors are influencing it
Knowing prices
Potential market Import per month UV 2010 - 14 ($/t) Monthly imported price Distribution of import(% of total import per month)
Highest Lowest Weighted Average
RomaniaJanuary
1.229September
443971
BulgariaJanuary
1.022September
357662
German(average Munchen
and Hannover)
March
2.334August
1.2521.851
Greece (average Solun and Atina)
March
1.591November
797996
0 $/t
500 $/t
1,000 $/t
1,500 $/t
jan
feb
mar
apr
maj
jun jul
avg
sep
okt
no
v
de
c
0%
10%
20%
30%
jan
feb
mar
apr
maj
jun jul
avg
sep
okt
no
v
de
c
0 $/t
500 $/t
1,000 $/t
jan
feb
mar
apr
maj
jun jul
avg
sep
okt
no
v
de
c
0%
10%
20%
jan
feb
mar
apr
maj
jun jul
avg
sep
okt
no
v
de
c
0 $/t
1,000 $/t
2,000 $/t
3,000 $/t
jan
feb
mar
apr
maj
jun jul
avg
sep
okt
no
v
de
c
0%
5%
10%
15%
jan
feb
mar
apr
maj
jun jul
avg
sep
okt
no
v
de
c
0 $/t
1,000 $/t
2,000 $/tja
n
feb
mar
apr
maj
jun jul
avg
sep
okt
no
v
de
c
0%
10%
20%
30%
jan
feb
mar
apr
maj
jun jul
avg
sep
okt
no
v
de
c
Knowing prices
Tomato glasshouse cost and revenue structure (1 ha, 10 years), Macedonian conditions
-1,400
-1,200
-1,000
-800
-600
-400
-200
0
200
400
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year10
Th
ou
san
d E
UR
Return of investment
New glasshouse MK commong practice EA investment offer
8%1% 5%
1% 1% 1% 2% 1% 5%2% 1%
13%8% 1%
21%
28% 2%
99% 1%
1.15 mil. €
2.94 mil. €
Profit 1.95
mil. €
0
1
2
3
4
5
6
7
8
Gla
ssh
ou
se
Ho
rizo
nta
l scr
een
He
atin
g
Hig
h p
rea
surr
e fo
gg
ing
sys
tem
Gro
win
g g
utt
ers
Irri
gat
ion
inst
alat
ion
Ele
ctri
cal i
nst
ala
tio
ns
Tra
nsp
ort
co
st m
ater
ials
Lab
ou
r fo
r co
nst
ruct
ion
Mas
hin
ery
eq
uip
me
nt
Co
ld s
tora
ge
To
tal i
nve
stm
en
t co
st
Gre
en
ho
use
pe
rso
nn
el
Su
pe
rvis
ion
Gro
we
r tr
ain
ing
Ro
w m
ater
ials
an
d s
up
ply
En
erg
y
Oth
er
vari
able
co
sts
To
tal c
ost
s
To
ma
to I
clas
s
To
ma
to II
cla
ss
Am
ort
iza
tio
n
Tax
es
To
tal r
eve
nu
e
Investment costs Variable costs Inflow
Mill
ion
€Variable costs
49%
Gross margin
51%
In proper biasness plan mistakes are very small
Proper business plan
Competitivness is possible to measure today theoretically (internally and externally) before even set up production
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
Feed Other variable costs Labour Depreciation and finance
InterPig Model, 2013LMC, study of sugar sector in Serbia
Measuring competitiveness at producer level
Competitiveness concept Policy level
Working together
Policy decisions lead to individual
business decisions
Separate duties
Individual business decisions lead to
country trend
0
5,000
10,000
15,000
20,000
25,000
30,000
2010 2011 2012 2013 2014 2015
THS
USD
Albanija Makedonija
Export of tomato from Macedonia and Albania
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2013 2014 2015 2016
Thsd
.USD
Export structure of crude oil: BiH 2013-2016
Turkey Others (11 countries)
Adding 44 million USD of export of refined oil
Policy influence at competitiveness
SEEDEV Competitiveness Model
Scoring formula for each product follows:
𝑚𝑖 =
𝑥𝑖𝑛 + 1
∙ 5 + 1
𝑗=1𝑛 (
𝑥𝑖𝑗
𝑛 + 1∙ 5 + 1)
where 𝑚𝑖 is score for the product 𝑖; 𝑥𝑖 – rank of the product 𝑖 for the specific
criteria; 𝑥𝑖𝑗– rank of the product 𝑖 for the criteria 𝑗 ; 𝑛 – total number of products
in the analysis.
Products are scored 1-10 so the formula determines the tenth of all products in which the products’ rank is in for the specific criteria and assigns corresponding score.
Chart Title
Production quantity Area harvested Yield Export quantity Value of export Export unit value
0
1
2
3
4
5
6
7
8
9
10
ProductionShare
ProductionTrend
Area Share
Area Trend
Yield Share
Yield Trend
QuantityShare
QuantityTrend
Value Share
Value Trend
UV Share
UV Trend
Fruits Apple
Hazelnut
Persimmon
Pro
du
ction
Trad
e
Share and trends
Production, trade, area harvest, export unit value, yield …
More than 30 indicators
Comparing with region (Central Asia, Caucasus, Western Balkan), EU, World
Production share0.
47%
0.02
%
0.25
%
0.30
%
0.57
%
0.32
%
0.19
%
3.55
%
0.02
%
0.07
%
0.38
%
0.10
%
0.16
%
3.32
%
0.21
%
4.71
%
0.00
%
0.31
%
0.07
%
0.00
%
0.17
%
0.01
%
0.03
%
0.33
%
0.21
%
0.00
%
0.21
%
0.28
%
0.00
%
0.30
%4.93
%
3.41
%
2.55
%
3.99
%
46.5
3%
41.7
0%
21.0
6%
17.5
2%
6.29
%
8.78
%
77.5
0%
3.97
%
21.7
6%
0.00
% 5.87
%
0.98
%
0.00
%
2.74
%
11.6
5%
0.20
% 5.92
%
36.1
5%
0.00
%
3.28
%
1.49
%
0.00
% 5.18
%
6.08
%
2.38
%
5.26
%
4.37
%
1.91
%
1.05
%
1.98
%
4.68
%
0.24
%
1.09
%
3.51
%
1.77
%
6.14
%
98.6
0%
3.75
%
14.2
2%
0.00
%
4.06
%
2.00
%
0.00
%
14.5
0%
0.13
%
0.97
% 5.83
%
4.87
%
0.00
%
4.13
% 9.13
%
0.00
%
2.65
%
0%
20%
40%
60%
80%
100%
120%
Bar
ley
Mai
ze
Wh
eat
Ap
ple
s
Ap
rico
ts
Ch
erri
es
Gra
pe
s
Haz
eln
ut
Lem
on
Man
dar
in
Mel
on
Pea
ch
Pea
rs
Per
sim
mo
ns
Plu
m
Qui
nce
s
Stra
wb
erri
es
Wat
erm
elo
ns
Co
tto
n
She
ep
Bo
vin
e m
eat
Tea
Car
rot
Cu
cum
bers
an
d g
her
kin
s
Eggp
lan
ts
Lee
ks
On
ion
s
Po
tato
es
Spin
ach
Tom
ato
es
Cereals Fruit Ind. Anim. Tea Vegetables
Production share of Azerbaijan
World share CIS share Region share
*Pomegranate is not taking into consideration since there is no reliable data for many countries
Export trends by products in Serbia (average 2010-2015)
Measuring trend by comparing with others
-60%
-40%
-20%
0%
20%
40%
60%
Trend Growth in relation to the World
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Onion Sesamumseed
Apricot Cotton Carrot Rice Beans Grape fresh Bovine live Apple Plum Tomato Potato Sunflowerseed
Wheat Poultry Bovine meat
Competitiveness of Tajikistsan in relation to CIS
Fruit Vegetable Cereal Oilcrops Industrial crops Animal products
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Cotton Apricot Onion Beans Sesamumseed
Carrot Rice Grape fresh Apple Plum Tomato Bovine live Potato Sunflowerseed
Wheat Poultry Bovine meat
Competitiveness of Tajikistan in relation to EU
Competitiveness is changing category by area
Competitiveness is changing category by time
Serbia competitiveness analysis 2013
Serbia competitiveness analysis 2017
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Fruits Vegetables Cereals Industrial crops Milk
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
25
Number of years (2005-2014)Domination (2010-2014)
SPC DPC SQC SPA
Milk 0 9 0 1 DPC
Maize 0 7 1 2 DPC
Potatoes 1 5 2 2 DPC
Grapes 0 1 1 8 SPA
Mandarins 5 0 5 0 SPC
Wheat 0 7 1 2 DPC
Tomatoes 1 4 0 5 DPC
Apples 5 5 0 0 DPC
Watermelons 0 3 7 0 DPC
Hazelnuts 4 0 6 0 SPC
Barley 0 4 6 0 DPC
Cucumbers 0 3 6 1 DPC
Eggs 2 4 0 4 DPC
Cabbages 4 2 0 4 SPA
Acronyms: SPC- successful price competitionDPC - deficit in price competitivenessSQC - successful quality competitionSPA - structural problem area (trade deficit despite low prices)
Product Competitiveness – quality and price competition case of Georgia
Half of the products have deficit in price competitiveness, trade deficit with high export prices. Four products are successful in price competition (hazelnuts, plums, cherries and sheep and goat meat), while only two are successful in quality competition in last five years (mandarins and peaches). Other products, mostly vegetables and meat, have structural problem which means that they have trade deficit despite low prices.
Number of years (2005-2014)Domination (2010-2014)SPC DPC SQC SPA
Peaches 6 0 4 0 SQC
Cattle meat 0 5 2 3 SPA
Pears 2 1 4 3 SPA
Onions 0 0 9 1 SPA
Pig meat 0 5 0 5 SPA
Walnuts 1 7 2 0 DPC
Beans 0 4 6 0 DPC
Poultry meat 0 4 0 6 SPA
Sunflower seed 0 9 0 1 DPC
Carrots 0 1 2 7 SPA
Plums 6 1 2 1 SPC
Garlic 0 3 4 3 DPC
Eggplants 0 3 4 3 SPA
Cherries 2 0 8 0 SPC
Peppers 0 4 4 2 DPC
Sheep/Goat 4 0 4 2 SPC
Price and Quility Competitiveness
00.10.20.30.40.50.60.70.80.91
Belarus
Russian Federation
Kazakhstan
Austria
Romania
Germany
France
Czechia
Netherlands
Hungary
Ukraine
Spain
United Kingdom
Belgium
Lithuania
Bulgaria
Latvia
Portugal
Sweden
Italy
Poland
Ireland
Slovakia
Denmark
Slovenia
Finland
Cyprus
Turkey
Estonia
Greece
Republic of Moldova
Iran
Georgia
Turkmenistan
Uzbekistan
Kyrgyzstan
Tajikistan
Azerbaijan
Armenia
Luxembourg
MaltaDemand
EU15 NMS Rest of CIS Region
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9
Turkey
Poland
Italy
France
Iran
Hungary
Germany
Spain
Rep. of Moldova
Ukraine
Greece
Austria
Netherlands
Romania
Portugal
Belgium
Belarus
Czech Rep.
Azerbaijan
Russian…
United Kingdom
Slovenia
Uzbekistan
Kyrgyzstan
Lithuania
Slovakia
Tajikistan
Ireland
Turkmenistan
Denmark
Georgia
Armenia
Kazakhstan
Bulgaria
Latvia
Sweden
Luxembourg
Estonia
Cyprus
Finland
Malta Supply
EU15 NMS Rest of CIS RegionSource: UN Comtrade
Product Competitiveness and Demand
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9
GermanyBelgium
FranceNetherlands
United KingdomPoland
IranDenmark
SpainRussian Federation
TurkeyBelarus
KyrgyzstanUkraineAustria
RomaniaItaly
Czech Rep.Ireland
AzerbaijanGreeceFinland
SwedenPortugalArmenia
KazakhstanCyprus
LithuaniaSlovakiaGeorgia
HungaryRep. of Moldova
UzbekistanTajikistan
LuxembourgLatvia
BulgariaMalta
TurkmenistanEstonia
Slovenia Supply
EU15 NMS Rest of CIS Region
00.10.20.30.40.50.60.70.8
Russian FederationGermanyUnited KingdomSpainBelgiumFranceIrelandItalyGreeceTurkeyNetherlandsPolandPortugalUzbekistanDenmarkSwedenCzech Rep.SlovakiaAustriaUkraineLuxembourgHungarySloveniaRomaniaIranFinlandBelarusCyprusLithuaniaKazakhstanArmeniaBulgariaAzerbaijanKyrgyzstanMaltaLatviaEstoniaGeorgiaRep. of MoldovaTurkmenistanTajikistanDemand
EU15 NMS Rest of CIS Region
Product Competitiveness and Demand
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Caucasus Gulf Rest of CIS NMS EU15 Selected markets
Competitiveness
Product Competitiveness and Demand
Hezelnut compatitivness comparsion
Export quantity Export value Export unit value Production Area harvested Yield
Exp
ort
Pro
du
ctio
n
1
2
3
4
5
6
7
8
9
10Production Share
Production Trend
Area Share
Area Trend
Yield Share
Yield Trend
Quantity Share
Quantity Trend
Value Share
Value Trend
UV Share
UV Trend
Azerbaijan
Uzbekistan
Georgia
Iran
• Know where you are
• Identify drivers for growth and gaps in the value chain
• Prepare technological cards
• Make analysis which will show where is the expected highest RoI / which technology level
• ….
Implement properly regardless are you entrepreneur or policy maker