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ECONOMIC ASPECTS OF PLACING KOSOVO-METOHIJA WINE ON THE INTERNATIONAL
MARKET
Katanic M.
Academy of Vocational Studies of Kosovo Metohija, Leposavic, Serbia
Katanic J.
High School of Modern Business, Belgrade, Serbia
Katanic Z.
Academy of Vocational Studies of Kosovo Metohija, Leposavic, Serbia
https://doi.org/10.5281/zenodo.7032219
Abstract
Wine production in Kosovo and Metohija has a long, centuries-old tradition, but unlike some previous times where wine was produced in large economic systems, today wine is produced in small and medium-sized family and local wineries. Small private wineries are becoming the backbone of wine production. Kosovo and Metohija are part of the global market, which in recent years has been trying to become part of the wine quality management system. Wine quality management is achieved by implementing concepts related to the quality of wine systems through the International Organization for Standardization (ISO)1 and Hazard Analysis Critical Control Point (HACCP)2. So, the concept of wine quality management is integrated from growing grapes in vineyards with the application of modern grape production technology with the application of ISO and HACCP standards in order to offer quality wine to the discerning market. Wineries in Kosovo and Metohija are not only based on the economic profitability of marketing wine to international markets, but also on quality.
Keywords: grapes, wine, wineries, export.
Methodological research
The aim of the work is to indicate the effects of growing vines and wine on an international level, while on a micro level the focus is on the area of Kosovo and Metohija. Several scientific methods were used in the work (method of generalization, comparison and classification, analytical and synthesis method). We obtained the necessary data from domestic professional literature dealing with this topic. Data from temporary institutions from Kosovo and Metohija as well as special publications from this area were used.
INTRODUCTION
The wine-growing region of Kosovo - Metohija includes two sub-regions: northern and southern. The northern subregion includes wines from the Istocki and Pec vineyards. The southern sub-region unites wine production from the Bakovo, Orahoracki, Prizren, Su-vorecka and Malisevo vineyards, with the largest being
the Orahovacka vineyard. The vineyards are located at an altitude of 300 to 600 meters above sea level, on moderately steep to gentle slopes. Soil types such as loam and alluvial soil, humus-silicate soil and other types of soil prevail.
After 2000, the tradition of viticulture in the north of Kosmet was renewed with large plantations on the slopes of Kopaonik and Rogozna near Leposavic. Given the known political situation in Kosovo and Metohija, the wine industry is regulated by two laws: the Wine Law of the Republic of Serbia, which defines two wine regions (North Metohija and South Metohija) and the Kosovo Wine Law, which was passed by the temporary institutions of Kosovo after the unilateral declaration of independence in 2008. Pristina institutions define two regions (Dukadini region and Kosovo Plain region). Therefore, Serbs from Kosovo and Metohija harmonized their wine production with
1 The International Organization for Standardization (ISO) defines a wide range of conditions related to quality management that are applicable to all products. Therefore, the ISO 9000 document defines quality as a preferred characteristic that a product must have, e.g. the product must be reliable, usable and repairable.
2 HACCP is a system that can be used as a series of procedures to control processes and sensitive points in the food production chain, with the ultimate goal that the consumer consumes food, in a condition and in a way that will be safe for his health.
Serbian laws, while Albanian wineries are harmonized with Kosovo laws.
According to data provided by Serbian sources, the current area under vineyards in Kosovo and Meto-hija is around 3,220 hectares. The most common white grape varieties are: Smederevka (45% or 358 hectares), Italian Riesling (28% or 218 hectares), Chardonnay
(13% or 106 hectares), Rhine Riesling (6% or 48% hectares), Zupljanka (3% ie 26 hectares). Of the black grape varieties, the most represented are: Vranac (26% or 447 hectares), Prokupac (25% or 401 hectares), Gama (18% or 289 hectares), Pinot Noir (11% or 112 hectares).
Viticulture of Kosovo and Metohija
Picture 1.
downloaded from the site: http://www.test2.viewsource.biz/strana/25_regije/31_kosovo-i-metohija/16.08.2022.
According to the data of the Ministry of Agriculture, Forestry and Rural Development from Pristina, in the Green Report 2019, they present data that the total production in vineyards in 2018 increased significantly compared to 2017 to about 27,322 tons, where table grapes recorded an increase of 57 %, and vines for 83%. Therefore, vineyard production recorded a growth of 78%, and yields increased by 74%. "In 2017, yields were 4.8 tons per hectare, and in 2018, 8.4 tons per hectare." Vines record higher yields of table grapes compared to 2017 by 79%, and table grapes by 54%.3
In the 1990s, vineyards covered an area of 8.8 million hectares (in Europe, 69.3% of plantations), in the middle of the 2000s, 7.7 million hectares (58.4% in Europe), and in 2013 they were reduced to 6,9 million hectares.4 It is estimated that the world area under vineyards occupies about 6.969 million hectares.
Wine production or the so-called of God's nectar in Kosovo and Metohija has a long tradition, so the wine sector can be a good example for cluster development, given that this segment is a rare example where exports are greater than imports. As is well known, one cluster helps create another.
3 Publication Green Report 2019, Ministry of Agriculture, Forestry and Rural Development, Prishtina, p: 75.
4 Denda, S., Denda, B., Production and commodity exchange of grapes and wine: situation in the world and in Serbia
(Sumadija region), Agroeconomika, year 45, number 70, Novi Sad, 2016, UDC: 338. 48, p: 82 .
The authors from Kosovo and Metohija Ramaj V. and Rama H. in their work from 2015 point out that 4965 winegrowers are seriously engaged in the production of grapes on an area of 3170.27 hectares. Varieties for wine production are grown on an area of 2455.82 hectares, table grapes on an area of 712 hectares and grapes for drying on an area of 2.45 hectares. Also, the same authors state that in 2013, 7.7 million liters of wine were produced. According to data from the register of Temporary Institutions of Kosovo and Metohija (Kuci Y, 2019), vines are grown on 3,320 hectares in 18 municipalities.
The agricultural sector has a significant share in the economy of Kosovo and Metohija. The average rural household owns about 2.4 hectares, while only 10% of the population owns more than 5 hectares.5 Therefore, the agricultural potential of Kosovo and Metohija is limited.
The largest exporters of wine in 2013 per ton:6 1. Italia 2016 t, 2. Spain 1831 t, 3. France 1515 t, 4. Chile 879 t, 5. Australia 711 t, 6. South Africa 605 t, 7. USA 414 t,8. Germany 400 t, 9. Argentina 322 t, 10. Portugal 306 t.
Country 2017. 2018. 2019. 2020.
Italia 4.250.000 5.480.000 4.750.000 4.910.000
France 3.641.900 4.920.000 4.220.000 4.660.000
Spain 3.248.000 4.490.000 3.370.000 4.070.000
USA 2.333.900 2.610.000 2.560.000 2.280.000
Australia 1.369.000 1.270.000 1.200.000 1.060.000
Argentina 1.182.100 1.450.000 1.300.000 1.080.000
China 1.163.600 930.000 780.000 660.000
* South Africa 1.080.100 950.000 970.000 1.040.000
Chile 949.200 1.290.000 1.190.000 1.030.000
Germany 746.200 1.300.000 820.000 840.000
Portugal 673.700 610.000 650.000 640.000
Russia 631.200 430.000 460.000 440.000
Romania 431.700 510.000 380.000 360.000
Brazil 355.300 310.000 220.000 220.000
Hungary 318.000 360.000 270.000 240.000
New Zeland 285.100 300.000 300.000 330.000
Greece 255.000 220.000 200.000 200.000
Austria 248.600 280.000 250.000 270.000
Ukraine 187.200 100.000 100.000 100.000
Moldova 180.100 190.000 150.000 120.000
Bulgaria 108.000 110.000 90.000 90.000
Serbia 99.300
Georgia 85.600
Japan 79.600
Switzerland 79.200 110.000 100.000 90.000
Peru 76.500
Croatia 72.600 100.000 70.000 70.000
Uruguay 67.300 70.000 60.000 70.000
CzechRepublic 64.500 70.000 50.000 60.000
THE WORLD Total 24.800.000 29.400.000 25.800.000 26.000.000
Picture 2: Wine production in 2017 in liters.7
Export of wine from Kosovo and Metohija to other markets in the period from 2013-2018. year was:8 1. Croatia - 14,216,165 liters, 2. Serbia - 12,892,127 liters, 3. Albania - 5,934,046 liters, 4. Slovenia - 1,731,604 liters, 5. Switzerland - 1,120,394 liters, 6. Czech Republic - 1,126 .460 liters.
An important factor for successful wine export is creating effective marketing and branding. International support and investments contribute to the promotion of Kosovo wine. The EU office in Kosovo launched the project "Wine Route and Development of Wine Culture in the South of Kosovo" in 2011-2013, in which 269,371 euros were invested. Kosovo bottled
5 Beilock, R., RETHINKING AGRICULTURE AND RURAL DEVELOPMENT IN KOSOVO, South-Eastern Europe Journal of Economics 2 (2005) 221-248.
6 https://worldpopulationreview.com/country-rankings/wine-
producing-countries
7 https://worldpopulationreview.com/country-rankings/wine-producing-countries;
8 https://www.statista.com/statistics/240638/wine-production-in-selected-countries-and-regions/
wine is most often sold on the domestic market or exported to the surrounding area or to CEFTA member countries. In order to increase the export of wine to international markets, certain conditions must be met, as well as the provision of internationally recognized certificates.
In 2021, Kosovo joined the Vranaec World Day program, because viticulture and wine production are developing at an incredible speed. Today, wines from Kosovo and Metohija are exported to Albania, Belgium, Bosnia and Herzegovina, the Czech Republic, Croatia, Japan, the Netherlands, China and the USA. There is an interesting data from the website Wine Searcher, which is one of the leading global wine search platforms, where it is stated that in the last five years there were "as many as 77" searches from North Korea for wine from Kosovo "Amselfelder Rosiere Lieblich, sweet wine from Metohija which costs around 4 euros per bottle. The Kosovo Ministry of Agriculture, Forestry and Rural Development, realizing the great importance of wine production, constituted the Department for Viticulture and Winemaking within the Ministry. Within the department, there are: viticulture sector, the wine sector and the sector for early detection of diseases and pests. This creates the conditions for quality monitoring, preparation of strategic plans for the development of winemaking. Also, the wine sector issues documents related to wine quality control and manages and organizes the process of organoleptic evaluation of wine.
Due to the excellent climatic conditions, black varieties are represented in three quarters of the vineyards, while white varieties make up a quarter. Of the black varieties, the most represented are Vranac (50.2%), Prokupac, Gamay, Black Burgundy, and of the white varieties Smederevka, Italian Riesling (Grasevina), Chardonnay and White Prokupac. In 2020, wine production was 9.3 million liters, half of which remained for domestic consumption, and the largest export was recorded to the Republic of Croatia and the Republic of Serbia. According to the data presented by the Government of Temporary Institutions in Kosovo, in 2020, 24 million euros were allocated for agriculture, with an increase in subsidies per hectare from one thousand to two thousand euros and subsidies per liter of wine from 4 cents to 8 cents. It is also reported that in 2020, Kosovo and Metohija exported food products, alcoholic beverages and tobacco worth around 43.5 million euros.
Kosovo's vinice
There are many names, some call them chateaus and wine houses, some call them cellars, somewhere they are wineries and wine cellars, and in Kosovo and Metohija they are vineyards. Vineyards are specially built parts of houses intended exclusively for grape processing and wine storage. The most famous are the Hocan vineyards. According to historical data from the
9 SAK 2012.
10 Responses to the Feasibility Study Questionnaire. June 2012
11 Vasiljevic et al. INFLUENCE OF THE GOVERNMENTAL INVESTMENT SUBSIDIES ON
12th century, Stefan Nemanja donated this area to the Hilandar monastery, since Velika Hoca reached its peak in the Middle Ages by building 24 churches and two monasteries. Back then, it was known that in this area the influence of the coastal climate, which penetrates the White Drina valley, has a beneficial effect on viticulture. This area has a large number of sunny days throughout the year at an average altitude of 400 meters, so it represents perfect conditions for growing vines. Many wineries such as "Decanska", "Vinice Brkic", "Vinarije Duricic", "Winarije Petrovic", "Winarije Antic" produce top quality wines known as "Decanska vina". Among the most famous wines are: the red wines "Rajska Basta" and "Izbor srca" as well as the white wine "Postojbina" from the Antic Winery. At the Petrovic Winery are "Metohija red wine", "Carsko red", white wine "Zavicaj". In the north of Kosovo and Metohija, the most famous wines are "Picus", "Parus", "Oriolus", "Upupa" and "Merula" from the Lakicevic Winery.
Wine production as a new economic opportunity in Kosovo and Metohija
The contribution of the agricultural sector in the gross domestic product (GDP) is almost 14.1%,9 while agricultural products account for 16% of total exports and the agricultural sector provides about 25 general jobs, mostly in the informal sector. 62% of the population of Kosovo lives in rural areas and the agricultural sector plays an important role in providing employment opportunities and generating income for citizens living in these areas.10
In recent years, wine producers from Velika Hoca have gathered business representatives from the north of Kosovo and Metohija in order to create additional opportunities for possible new ways of economic cooperation.
It is important to point out that viticulture represents an important branch of agriculture in Kosovo and Metohija. The areas under vineyards were drastically reduced until the last decade. There were many reasons for this. The most important reasons for such a situation are the high investment costs for establishing a vineyard. Average investment costs are from 20,00025,000 euros for traditional technology that does not include modern technological systems such as irrigation, anti-hail networks, anti-frost system, etc. Lack of financial resources is the main reason why the area under vineyards is decreasing. The economic effectiveness of investing in vineyards is negative with the current input and output prices. With various government subsidies (for grape seedlings and vine stakes), the effectiveness results are positive values.11 Therefore, stronger subsidies for investments affect the revitalization of viticulture in Kosovo and Metohija. The effectiveness of investments in viticulture is influenced by two factors, grape yields and sales price changes. The level of investment sensitivity is relatively high, because weather or market fluctuations can affect the reduction of the
DEVELOPMENT OF SERBIAN VITICULTURE, ECONOMIC THEMES (2017) 55(2): 179-198.
value of production and thus the effectiveness of investment in vineyards can be jeopardized.
Independent winegrowers offer grapes to wineries for a relatively low price of 15-25 cents depending on the grape variety (Retallack, 2010). The average price of a 750 ml bottle of wine in retail is 3.35 euros, and the lowest price of domestic wine is 2.86 euros, Pinot Noir 3.07 euros, Cabernet Sauvignon 3.82 euros, Merlot 3.59 euros and Chardonnay 3.43 euros.12
Conclusion
The production of grapes and wine represents a significant share in the agricultural activity of Kosovo and Metohija. The wine trade generates high incomes for traditional producers in Italy, France and Spain. Kosovo and Metohija is creating its place on the international market. The dominant position in the production and export of wine is held by small individual producers who find their way to regional markets with high-quality grape varieties. The synergy of wine production and tourism generates additional income. Therefore, there are conditions for the economic conditions of Ko-sovo-Metohija wine on the international market.
References:
1. Publication Green Report 2019, Ministry of Agriculture, Forestry and Rural Development, Prisht-ina, p: 75.
2. Denda, S., Denda, B., Production and commodity exchange of grapes and wine: situation in the world and in Serbia (Sumadija region), Agroe-conomika, year 45, number 70, Novi Sad, 2016, UDC: 338. 48, p: 82 .
3. Beilock, R., RETHINKING AGRICULTURE AND RURAL DEVELOPMENT IN KOSOVO, South-Eastern Europe Journal of Economics 2 (2005) 221-248.
4. SAK 2012.
5. Responses to the Feasibility Study Questionnaire. June 2012
6. Vasiljevic et al. INFLUENCE OF THE GOVERNMENTAL INVESTMENT SUBSIDIES ON DEVELOPMENT OF SERBIAN VITICULTURE, ECONOMIC THEMES (2017) 55(2): 179-198.
7. Taulant Gecaj, The Future of Kosovo Wine Industry: How to Improve Performance on the Domestic and International Markets?, International Journal of Innovative Science and Research Technology, Volume 5, Issue 5, May - 2020
8. https://worldpopulationreview.com/country-rankings/wine-producing-countries
9. https://www.statista.com/statistics/240638/wi ne-production-in-selected-countries-and-regions/
12 Taulant Gecaj, The Future of Kosovo Wine Industry: How to Improve Performance on the Domestic and International
Markets?, International Journal of Innovative Science and Research Technology, Volume 5, Issue 5, May - 2020.
