Page 12 - DMA Bosnia & Herzegovina Report 2013

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Investing In Bosnia & Herzegovina
rom a macro perspective,
the agriculture sector in
Bosnia and Herzegovina has
considerable untapped potential.
In its Agricultural Sector Policy Note for
Bosnia and Herzegovina, published in 2010,
theWorld Bank notes that:
Favourable climate conditions and relatively
low factor prices give the agriculture
sector in Bosnia and Herzegovina (BiH)
a clear comparative advantage over other
countries. The agricultural season in BiH
begins earlier than in most European
countries, shipping costs are relatively
low, and land and labour prices are
more favorable than in other southern
European countries. As a result, the
country’s agriculture sector should be well
positioned to compete on the export
markets. Estimates of domestic resource
cost (DRC) suggest highly efficient use of
resources in the production of a number of
crops, as compared with the opportunity
cost of these resources. With yields well
below the EU-27 average, BiH’s agriculture
sector shows significant growth potential.
TheWorld Bank repor t also details some
of the constraints currently hindering the
development of the agriculture sector in
BiH, including: the lack of post-harvest
facilities for storage and packaging; poor
access to affordable finance; market
failures such as high input prices and
low bargaining power for farmers and
other stakeholders; fragmented supply
chains and land ownership; institutional
constraints such as the absence of EU-
compliant regulatory frameworks for
food safety; and relatively low levels
of investment into public goods, such
as market infrastructure and natural
resource management.
The repor t sums up the post-
independence, post-civil war situation by
concluding that:
“BiH’s agriculture sector is at a turning
point. The role of the agri-food sector
needs to be defined, either remaining
primarily as a source of subsistence for
a relatively poor rural population, or
evolving into a more competitive sector
that can substitute for impor ts and
expand expor ts. Today’s sector tends
to suppor t the former, and developing
a more competitive agriculture sector
would require a significant shift in
agricultural expenditures and policies.
Regardless, given the country’s EU
accession aspirations, cer tain reforms will
be necessary sooner rather than later.”
Against this backdrop, the government of
BiH has been working in concert with the
international development community to
overhaul its agricultural sector, institute the
necessary reforms required to compete
in a free market and take the necessary
steps to prepare for EU accession. The
government has repeatedly highlighted
by Brian Naughton