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European Commission – Agriculture and Rural development Bosnia and Herzegovina - Agriculture and Enlargement Bosnia and Herzegovina became independent in April 1992, but shortly afterwards the country plunged into a three-year conflict. On 21 Nov 1995 a peace agreement was reached in Dayton (USA).It retained country's international boundaries and created two political entities within the state: the Federation of Bosnia and Herzegovina, Republika Srpska and District of Brcko. Bosnia and Herzegovina has a territory of 51.280 km² and population of 3,85 mio. The EU is the main trading partner (in 2006 – 54 % of export and 52 % of import). Agriculture is still one of the most important sectors of the economy providing food security for large part of the population. Main Country Indicators

Total area (in km²)

Population (thousands)

Population density (per km²)

GDP (EUR mio)

GDP growth (% change from previous year)

Bosnia & Herzegovina

51 209 3845 75.1 12 268 -2.9

All West Balkan countries1 264 462 23 658 89.2 109 669.30 -3.42

EU 27 4 308 406.6 501 103 116.0 11788711.1 -4.2

Sources: Eurostat for year 2009 (in exception with BiH population density based on Eurostat for year 2007) 1 Croatia, the former Yugoslav Republic of Macedonia, Albania, Bosnia & Herzegovina, Montenegro, Serbia, Kosovo (UNSCR 1244) - Towards EU Membership Stabilisation and Association Process Bosnia and Herzegovina participates in Stabilisation and Association Process (SAP) and is committed to engage necessary political, economic and social reforms leading to progressively closer relationships with EU and to the potential future accession. The negotiations on a Stabilisation and Association Agreement (SAA) were launched in November 2005. On 16 June 2008, the SAA was signed. The Interim Agreement to the SAA, providing the legal framework for the liberalisation of trade between EU and Bosnia and Herzegovina, entered into force on July 2008. European Partnerships (EP) The European Partnership is an instrument of the SAP which lays down the principles and enumerates medium and short term priorities the country should address on their way towards EU integration. The Partnerships are revised every 2 year. The recent EP adopted on 18 February 2008 stipulates as the main priority for the country the adoption of the basic legislative framework for the agriculture sector as well as establishment of administrative structures at the State-level, including Ministry for Agriculture. Further steps would require the implementation of the adopted laws and strategy. IPA – The Instrument for Pre-accession Assistance (2007 – 2009) Bosnia and Herzegovina will receive € 218.3 million over a period 2011-2012. 95% of the envelope will be directed to projects under IPA component I Transition Assistance and Institution Building – which follows the priorities set in the EPs; the rest will fund Cross Border Cooperation projects. Institutional

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reforms necessary for implementation of the stabilisation and association agreements will also be funded with IPA. Agriculture sector Out of total area of 5, 113 millions hectares of the country, 47% represents agriculture land. Bosnia and Herzegovina is relatively poor in agriculture resources: large parts of the country are mountainous (66% of territory is considered mountainous or hilly), only 20% (approx.1.0 million ha) is suitable for intensive farming. High availability of grassland and mountainous pastures suggests a potential advantage for production of livestock and diary products. Orchards and vineyards cover approximately 100 000 hectares. The structural of agriculture is sector is characterised by small sized family farms which to large extent produce for home consumption – over 50% of agriculture holdings are estimated to be less than 2 ha; the state firms, generally much larger, are mostly not operating or in difficulties often due to not finalized state of privatisation. Agricultural production in Bosnia and Herzegovina is dominated by crop production, with livestock production representing less than one third of the total output. Slight increase of this share in recent years is due to the increase in cow milk production. The economically most important sub-sector of BiH agriculture is vegetables. Of considerable importance are also fresh cow milk, maize and potatoes. The share of the agricultural sector in the overall GDP stands around 10% and is decreasing, however agriculture remains still one of the most important economic sectors in Bosnia and Herzegovina, providing food security for a significant part of rural population. Taking into account that rural population accounts for 60% of the population of the country, agriculture sector allows generating a basic income for a major part of rural population and provides a ground for a political and economic stability. On the Entity level, the agriculture sector is more important for the economy of Republika Srpska (RS), when it is estimated to be around 13% of the GDP (2005), than for the Federation of Bosnia & Herzegovina where it stands stable at 6%. Agri food processing industry is recovering after a long period of under-investment over the last decade and its share in the GDP is increasing (8% in 2005). In 2006, the sector attracted the largest amount of FDI, 80% of the industry had been already privatised. Rural development policy remains still of marginal interest in Bosnia and Herzegovina. The situation in Republika Srpska differs to a certain extent, as 1.9 millions € was allocated for rural development in 2005. Current political debates in Bosnia and Herzegovina do not foreseen the establishment of a common Ministry of Agriculture at the state level in the near future. Economic importance of agriculture BiH EU 27

Utilised Agriculture area (000 ha) 1.656 182,129

Proportion of total area 32.3% 42.3%

Proportion of Arable land 31.7% 59.3%

Proportion of Perm grassland 62 % 30.9%

Share of agricultural labour in total labour 19.4 %* 5 %*

Share of GDP % 10.4* 2* Sources: Eurostat for year 2009 *2006 data EU agricultural trade with BiH Since 2000, Bosnia and Herzegovina benefited from the autonomous trade measures (ATM's) granted unilaterally by the EU allowing for free access to the EU market for almost all agricultural products,

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except for wine, some fishery products, sugar and baby beef where tariff quotas were introduced. Initially granted for a five-year period, these measures were extended until 2010.

The Stabilisation and Association Agreement put into contractual provisions the preferences granted under the ATMs, and in addition, included other trade issues, such as services, procurement, intellectual property right and competition. The SAA between Bosnia Herzegovina and the Community was finally signed on 16 June 2008, and immediately after, on the 1 July, the Interim Agreement entered into force allowing for the trade provisions to take effect.

Bosnia and Herzegovina joined the Central European Free Trade Agreement on 6 September 2007. Bosnia and Herzegovina is not yet member of the World Trade Organisation (WTO).

Agricultural products 2008 2009 2010 Avg 2010/2008

EU imports (mio €) 59.3 55.8 84.6 66.6

EU exports(mio €) 308.0 246.4 278.1 277.5

Trade balance for EU (mio €)

248.7 190.6 193.5 210.9

Source: EC, Comext

The product groups accounting for the largest share of agricultural and food imports (in value) of Bosnia and Herzegovina are beverages, cereals, tobacco, edible preparations, sugars and dairy products.

Out of Bosnia’s total exports, edible preparations, beverages, fruit and vegetables account for the largest value. The export to the EU consists mainly of sugars (isoglucose), vegetables, fruits and nuts, animal or vegetable fats and oils and raw hides and skins. The predominant kind of vegetable exported to the EU is mushrooms (fresh, chilled, dried or frozen). The most exported fruits are fresh plums and frozen raspberries.

The country remains a net importer of agricultural and food products.

BiH trade performance of agriculture products

EU Imports (in mio €)

2008 2009 2010 Ø

08-10

EU Exports

(in mio €)

2008 2009 2010 Ø

08-10

Sugar 7.5 6.5 7.0 7.0 Cereals 79.2 28.4 39.5 49.1

Fruits and nuts 6.2 7.1 10.6 8.0 Dairy, eggs,

honey 27.9 26.2 36.6 30.2

Vegetables 3.6 5.4 8.9 6.0 Sugar 8.9 8.5 8.2 8.5

Raw hides and skins 26.8 16.6 36.3 26.6 Meat, edible

meat 20.1 24.8 29.5 24.8

Fats and oils 5.5 10.4 10.8 8.9 Fats and oils 18.6 23.5 21.6 21.2

Source: EC, Comext

Agriculture production statistics

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LIVESTOCK (000 heads) 2007 2008 2009 EU 27 in

2008 In % of EU 27 in 2008

Cattle 468 459 458 88 837 0.5

Diary Cows 307 297 293 24 000 1.2

Sheep and goats 1100 1101 1125 91 154 1.2

Pigs 535 502 529 153 067 0.3 Source: Eurostat

CROPS (000 tonnes) 2007 2008 2009 EU 27 in 2008

In % of EU 27 in 2008

Cereals 1 000 1375 1342.8 314 919 0.4 %

Sugar beet n/a n/a n/a 114 810 n/a

Oilseeds 12.0 10.7 10.2 17 495 0.1 %

Fruits and vegetables 463 n/a n/a 44 667 n/a Source: Eurostat