The Meat and Dairy Sector in Bosnia and Herzegovina in Bosnia the Meat and Dairy Sector

This project is funded by the European Union

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Regional Oﬃ ce for Europe and Central Asia Food and Agriculture Organiza on of the United Na ons (FAO) The Meat and Dairy Sector in Benczúr u. 34, 1068 Budapest, Hungary Telephone: (+36) 1 461 2000 Fax: (+36) 1 351 7029 Bosnia and Herzegovina Email: [email protected] Website: www.fao.org/europe/en Preparation of IPARD Sector Analyses in Bosnia and Herzegovina Electronic Version of the report: h p://www.fao.org/europe/publica ons/documents-and-reports/IPARD-BiH/

2012 The Meat and Dairy Sector in Bosnia and Herzegovina in Bosnia The Meat and Dairy Sector

FAO Regional Oﬃ ce for Europe and Central Asia

31 August 2012

FAO Regional Ofice for Europe and Central Asia Cover photograph: ©FAO/Vlado Pijunovic The Meat and Dairy Sector in Bosnia and Herzegovina Prepara on of IPARD Sector Analyses in Bosnia and Herzegovina GCP/BIH/007/EC Contract number: 2010/256–560

Regional Oﬃ ce for Europe and Central Asia Food and Agriculture Organiza on of the United Na ons

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© FAO 2012 Mesni i mliječni sektor u Bosni i Hercegovini 1. Izvršni sažetak i Hercegovini; i objedinjuje sta s čke podatake kao i nalaze ankete koja je Ovaj dokument je sačinjen u standardnom sprovedena na farmama u svrhu ove studije IPARD formatu sektorske studije, sa analizom kako bi se formirala sveobuhvatna procjena koja se progresivno razrađuje kroz poglavlja broja stada i jata, broja živo nja, kao i kako slijedi: proizvodnje mlijeka i mliječnih proizvoda 1.1 Osnovne informacije i ključni podaci kao i vrste marke nga za svaki p farme, sa procjenama vrijednos i obima Poglavlje 1 pruža opšte informacije o Bosni i Hercegovini kao i sektoru stočarstva, – Ključni nalaz 3: Stočarskim sektorom pripremljeno za svaku pojedinačnu dominira veliki broj veoma malih sektorsku studiju na osnovu objavljenih gazdinstava sta s čkih podataka. – Ključni nalaz 4: Broj “komercijalnih” farmi je veoma malen, premda proizvode većinu – Ključni nalaz 1: Stočarstvo je najavažniji peradi kao i umjeren omjer ukupnog broja sektor BiH poljoprivrede ovaca . Ukupno BDP: € 12,7 milijardi Stočarske farme u BiH mogu da se podijele u . Poljoprivreda BDP: € 930 miliona (7 posto) tri sektora: . Stočarstvo dobitak: € 900 millona (cijena . Domaćinski sektor, koji uglavnom proizvodi proizvoda koju dobija farma) u svrhu sopstvene proizvodnje plus nešto malo neformalne prodaje – Ključni nalaz 2: Preko 300.000 poljoprivrednih gazdinstava drži nešto • Goveda = 1 krava stoke, čime se značajno doprinosi prihodu • Ovce = 1-5 ovaca/janjad za tovljenje domaćinstva • Svinje = 1 krmača/1-3 svinje za tovljenje Na anke ranim farmama: • Perad = 1-20 kvočki/1-50 brojlera . Mlijeko i mliječni proizvodi uzimaju učešće . Komercijalni sektor, veće farme sa 20 procenata u prihodu domaćinstva koje uglavnom proizvode za prodaju registrovanim klaonicama i mljekarama: . Mlijeko i stoka uzimaju učešće sa 50 procenata u prihodu domaćinstva • Goveda = preko 20 krava • Ovce = preko 100 ovaca 1.2 Farmeri / poljoprivredni proizvođači • Svinje = preko 20 krmača/200 svinja za Poglavlje 2 daje pregled ključnih sta s čkih tovljenje po ciklusu podataka a potom razrađuje kvan ta van • Perad = preko 500 kvočki / 1.000 brojlera opis i pologiju stočarskih farmi u Bosni po ciklusu

Tabela 1.1: Broj farmi i živo nja

Vrsta Farme Ukupno grla Rasplodne ženke 381.000 223.000 Goveda 161,000 (cca. 2,4) (cca. 1,4 krave) 1,515,000 1,059,000 Ovce 63,000 (cca. 24 ovce) (cca. 17 ovaca) 585,000 82.000 Svinje 127,000 (cca. 4,6 svinja) (cca. 0,7 krmača) 188.000 (nosilje) 6,6 miliona 5,5 million Perad 29.000 (brojlera) (cca. 227 kokoški) (cca. 26 kokoški) Graﬁ kon 1.1: Broj farmi po sektoru

. Sektor malih farmi, sve druge farme, npr. – Ključni nalaz 5: Farme sa 1-5 krava proizvode one koje uglavnom proizvode za prodaju, 85 % od ukupne opskrbe mlijekom i 60 % ali su još uvijek ispod veličine koja se opskrbe mljekara mlijekom uobičajeno smatra ekonomski održivom farmom sa punim radnim vremenom u – Ključni nalaz 6: Korištenje domaćinstva zapadnoj Evropi i neformalni marke ng su veoma važni, posebno za mlijeko, ovčije meso i svinjsko Komercijalnim farmama se smatra veoma meso mali broj farmi za svaku vrstu, u sljedećim okvirima: Stočarski proizvodi dolaze na tržište putem tri glavna kanala: . Goveda: 400 farmi (0,25 procenata) . Domaćinstvo: Korištenje mlijeka, jaja, . Ovce: 1.000 farmi (1,6 procenata) domaćih mliječnih proizvoda kao i mesa . Svinje: 25 farmi (0,02 procenata) od živo nja zaklanih kod kuće od strane . Perad: 600 farmi (0,3 procenata) proširene farmerske porodice.

Graﬁ kon 1.2: Broj živo nja po sektoru Graﬁ kon 1.3: Marke nški kanali za mlijeko, meso i jaja

. Neformalni marke ng: Prodaja mlijeka i – Ključni nalaz 7: Potrošnja mesa po jaja direktno lokalnim potrošačima ili na glavi stanovnika je pična za region, sa (zelenim) pijacama; prodaja stoke za klanje balansom između vrsta koje odražavaju mesarima, restoranima i porodicama. lokalne uslove i preference . Formalni marke ng: Prodaja mlijeka ZAKLJU ČAK 1: Strukture farmi će se mljekarama i stoke registrovanim klaonicama. promijeni , ali vremenski polako, a BiH

Grafi kon 1.4: Godišnja potrošnja mesa po glavi stanovnika treba da planira ulazak u EU sa stočarskim – Ključni nalaz 16: Prerada mlijeka kombinuje sektorom kojim dominiraju male farme lokalne zalihe sa je inim uvozom ZAKLJU ČAK 2: Broj farmi dovoljno velikih Proizvođači navode da: da budu uspješno konkurentne za . Meso lokalnih proizvođača je do 30 % IPARD grantove je mali, i većina farmi će skuplje nego uvoz zah jeva dodatne izvore inves ranja . Kvaliteta uveženog mesa je dosta adekvatna obradi 1.3 Prerađivači . Željeli bi da koriste više uveženog mesa Poglavlje 3 daje sistemski opis formalne proizvodnje mlijeka i mliječnih proizvoda – Ključni nalaz 17: Asor man mesnih u Bosni i Hercegovini, a prvenstveno se proizvoda je tradicionalan, usmjeren zasniva na anke izvršenoj licem u lice sa ka lokalnom i CEFTA tržištu, sa dobrom proizvođačima od strane projektnog ma. kontrolom kvaliteta i pakiranjem – Ključni nalaz 8: Prerađivački sektor se – Ključni nalaz 18: Tvornice za mesnu oporavio nakon rata, u nekim slučajevima preradu subrom stanju, ali neophodna su čak uspijeva i da “prevaziđe” susjedne znatna ulaganja u klaonice za crveno meso zemlje – Ključni nalaz 19: BiH nema odgovarajući – Ključni nalaz 9: Prikupljanje mlijeka je sistem odlaganja otpada iz klaonica kao ni raznovrsno, a uključuje otkupne centre uginule ili oboljele stoke i posrednike kao i direktno prikupljanje ZAKLJU ČAK 3: Mljekare i proizvođači mlijeka od strane mljekara, a određene količine treba da učine svoj asor man raznolikijim sirovog mlijeka još uvijek nije rashlađeno kako bi prodrli na tržište EU – ali imaju – Ključni nalaz 10: Dnevno prikupljanje male pods caje na inovacije bez pristupa mlijeka po farmi je neznatno (cca. 26 tržištu litara), čime se povećava jedinična cijena ZAKLJU ČAK 4: Kako proces EU integracije – Ključni nalaz 11: Tes ranje sirovog mlijeka povećava pristup je inijem uvoznom teče dobro u RS, ali ne i u FBiH mesu, benefi cije od istog će osje prerađivači, ali će to stavi dodatni – Ključni nalaz 12: Proizvodnja mlijeka je pri sak na proizvođače dvomodna ZAKLJU ČAK 5: Najvažniji inves cioni prioritet . Više od 75 % prikupljenog mlijeka obrađuje u preradi koji je relevantan za IPARD 7 mljekara je tretman tekućeg otpada i odlaganje . Oko 50 mljekara, plus nepoznat broj mikro otpada mljekara obrađuje preostalih 25 % 1.4 Javna poli ka – Ključni nalaz 13: Većina mljekara se  koncentrise na etablirane regionalne Poglavlje4 daje pregled državne podrške, proizvode, sa većim mljekarama koje regulatorne i trgovinske poli ke koje u ču također proizvode UHT mlijeko stočarske farme i prerađivački; uključuje i opš uvod u strategije na državnom i – Ključni nalaz 14: Većina mljekara je u en teskom nivou, koje su izrađene za svih dobrom stanju u tehničkom i fi nansijskom pet sektorskih studija. smislu, a gotove sve imaju HACCP ser fi kat – Ključni nalaz 20: Jedinstvena – Ključni nalaz 15: Osnovne potrebe se administra vna struktura BiH pruža odnose na laboratorije, i posebno na posebne izazove u smislu kreiranja poli ka, odgovarajuće odlaganje tekućeg otpada implementacije kao i sprovođenja is h Grafi kon 1.5: Vanjska trgovina BiH za stočarski sektor u 2010. godini

– Ključni nalaz 21: Subvencije za stočarstvo 1.5 Marke ng u oba en teta favorizuju veće farme i uglavnom streme ka socijalnim a ne Poglavlje 5 daje prikaz raznih domaćih razvojnim ciljevima marke nških kanala koji se koriste u stočarstvu i proizvode; prezentuje ZAKLJU ČAK 6: BiH će teško dobiti EU sistemsku analizu trgovinskih podataka odobrenje za izvoz mesnih proizvoda i iden fi kuje glavne trgovinske partnere bez osiguranja unifi ciranog sistema BiH za svaku vrstu stočarskog proizvoda; veterinarske kontrole prezentuje balans između nabavke i upotrebe, u smislu vrijednos , za čitav ZAKLJU ČAK 7: Oba en teta treba da sektor stočarstva. preusmjere svoju podršku stočarstvu na manje farme kako bi se pripremile ua – Ključni nalaz 22: BiH ima ogroman pristupanje EU trgovinski defi cit u stočarskim proizvodima

Graﬁ kon 1.6: Vrijednost uvoza i izvoza stočarskih proizvoda od strane trgovinskih partnera u 2010. godini i u velikoj mjeri zavisi od Hrvatske kao 1.7 Inves ranje izvoznog tržišta Poglavlje 7 daje prikaz skorijih inves ranja – Ključ ni nalaz 23: Proizvodnja malog obima u stočarske farme i prerađivačka i neformalni marke ng mnogo doprinose postrojenja; obrađuje temu dostupnos državnoj opskrbi hranom i balansu kredita i vladinih subvencija; prezentuje

Graﬁ kon 1.7: Potencijalni efekat smanjenog neformalnog marke nga i korištenja stočarskih proizvoda u domaćinstvu na na trgovinski balnas

ZAKLJUČAK 8: Pristupanje Hrvatske EU će opsežnu sliku poljoprivrednog fi nansijskog ozbiljno uzdrmati stočarski sektor u BiH, sektora koja je izrađena za svih pet sa dramatičnim padom izvoza sektorskih studija. 1.6 EU standardi – Ključni nalaz 26: Pristup kredi ma je ogromno ograničenje za stočarske Poglavlje 6 pruža pregled trenutno stanja proizvođače, a posebno za male farme u Bosni i Hercegovini u smislu usklađenos svakog elementa sa acquis communautaire ZAKLJUČAK 9: Uprkos ostvarenjima za stočarski sektor; napominje da Bosna i inves cionih banaka i mikro-kreditnih Hercegovina još uvijek nema odobrenje EU organizacija, kao i obećanja povodom da izvozi stoku uzgojenu na farmama ni IPARD fi nansiranja, uočena je ogromna proizvode od is h. neusklađenost između ponude kredita i inves cionih potreba farmi – Ključni nalaz 24: Stočarske farme nisu usklađene sa EU standardima u tri glavna 1.8 Iden fi kovanje potencijala i potreba područja: odlaganje i rukovanje gnojivom, unutar sektora dobrobit živo nja, i higijena mlijeka Poglavlje 8 daje pregled SWOT – Ključni nalaz 25: Prerađivači nisu usklađeni analize kako za stočarske farme tako i sa EU standardima u če ri glavna područja: proizvođače, zasnovanih na radionicama klaonice za srveno meso, odlaganje interesnih strana održanih u Sarajevu i otpada iz klaonica, obrada tečnog otpada, Banjoj Luci; prezentuje nalaze projekta i tes ranje sirovog mlijeka na sprovodenoj anke na farmama vezano za trenutno stanje infrastrukture za različite grupe korisnika, uključujući i njihovim inves cionim potrebama; daje farmere, prerađivače i inspektore. procjenu o tome kako će integracija u EU u ca na svaki p stočarske farme; – Ključni nalaz 28: Postojeće službe uspostavlja referentne vrijednos kako za pružanje savjetodavnih usluga u bi se stočarski sektor u BiH stavio u poljoprivredi se neadekvatne da pruže evropski i regionalni kontekst; predviđa pomoć 300.000 stočarskim farmama buduću strukturu sektora zasnovane na kako bi ispunile EU standarde i poboljšale anektnim odgovorima i daje procjenu o tehničku efi kasnost, upravljanje i ukupnim inves cionim zahtjevima; sumira marke ng inves cione prioritete za stočarske farme i ZAKLJUČAK 10: Uspostavljanje efek vnog prerađivače. brojnijeg sistema za pružanje usluga u – Ključni nalaz 27: Inves cioni priorite poljoprivredi je prioritet broj jedan odražavaju uočene nedostatke u smislu 1.10 Ishodi / Rezulta neusklađenos sa EU standardima, plus potreba za povećanjem obima i tehničke Poglavlje 10 daje kratak sažetak ključnih efi kasnos faktora koje treba uze u obzir prilikom kreiranja inves cionih mjera za sektor . Proizvođači: BiH stočarstva; prezentuje prijedloge za • Povećanje stada/jata (posebno mljekare; šest specifi čnih mjera koje se fi nansiraju u sa napomenom da se IPARD sredstva ne sklopu IPARD programa. mogu koris za kupovinu stoke) – Ključni nalaz 29: Implikacije pristupanja • Zgrade i oprema (posebno mljekare) EU po stočarske farme po ču direktno iz • Mašinerija (posebno za krmu) njihove strukture • Odlaganje i rukovanje gnojivom (posebno . Goveda (160.000 gazdinstava) goveđim i svinjskim) • Ogroman strukturalni problem u . Prerađivači mlijeka: mljekarskoj proizvodnji, sa potrebom • Unaprjeđenje postrojenja kako bi se pružanja pomoći manjim farmama da se poboljšala opera vna efi kasnost i opseg adap raju promjenama; manje ozbiljan proizvoda problem u proizvodnji govedine. • Laboratorije unutar postrojenja kako bi . Ovce (50.000 gazdinstava) se unaprijedila kvaliteta proizvoda • Manje ozbiljan sturkturalni problem, • Skladištenje i tretman tekućeg otpada pošto i manje farme mogu da budu kako bi se ispunili standardi o zaš usklađene sa EU regula vom i održive u životne sredine komercijalnom smislu, premda će samo . Prerađivači mesa: veće farme vjerovatno učestvova u • Unaprjeđenje postrojenja kako bi se IPARD. poboljšala opera vna efi kasnost . Svinje (130.000 gazdinstava) • Skladištenje, prevoz i odlaganje • Veliki problem konkurentnosti, živo njskog otpada rezultat koje će vjerovatno biti prestanak proizvodnje na manjim 1.9 Iden fi kacija potreba za svinjogojskim farmama; samo veće obučavanjem u sektoru farme će vjerovatno imati dugoročniju Poglavlje 9 daje pregled postojećih struktura komercijalnu budućnost, i one mogu u koje pružaju obuku, savjete i informacije velikoj mjeri da izvuku ogromne koristi stočarskom sektoru; prezentuje kratak od IPARD pomoći. sažetak ključnih prioriteta za obučavanje . Perad (220.000 gazdinstava) • Kvočke: Modernizacija poljoprivrednog gazdinstva » Trenutna dvomodalna stuktura je (101): održiva, pošto je veliki broj malih a. 101/1: Unaprjeđenje i uvećanje farmi u suš ni nekomercijalan; mnoge poljoprivrednog gazdinstva velike komercijalne farme će zah jeva značajnu podršku kako bi se uskladile sa b. 101/2: Skladištenje i odlaganje EU standardima. gnojiva • Brojleri: c. 101/3: Mašinerija za krmno bilje » Manje farme brojlera imaju neznatnu Obrada i marke ng poljoprivrednih komercijalnu budućnost; IPARD ulaganje proizvoda (103): treba da se fokusira na pomaganje velikim farmama brojlera da se usklade a. 103/1. Unaprjeđenje prerađivačkih sa EU standardima, povećaju efi kasnost postrojenja i da nastave da se šire. b. 103/2: Skladištenje i odlaganje – Ključni nalaz 30: 3 IPARD mjere su mljekarskog tekućeg otpada predložene za proizvođače a tri za c. 103/3: Sakupljanje i obrada prerađivače stočarskih proizvoda živo njskog otpada PREPORUČENE IPARD MJERE – FARMERI: MODERNIZACIJA POLJOPRIVREDNIH GAZDINSTAVA (101) 101/1: Unaprjeđenje i uvećanje poljoprivrednog gazdinstva Ciljevi: Ostvarivanje EU standarda u smislu higijene, dobrobi živo nja i okoline Povećanje konkurentnos preko uvećanja jata/stada i poboljšanje efi kasnos Opravdani troškovi: Izgradnja i rekonstrukcija zgrada/objekata Izgradnja prostorija za gnojivo Kupovina mašinerije i opreme Opravdana veličina preduzeća na kraju ulaganja: 20 – 200 krava 100 – 5,000 rasplodnih ovaca 20-500 krmača 200-5,000 svinja za tovljenje po ciklusu 500-50,000 kvočki 1,000 – 100,000 brojlera po ciklusu Procjena broja potencijalnih aplikanata: Goveda: 230 postojećih farmi (+ proširenje do 300) Ovce: 1,000 postojećih farmi (očekuje se niska stope aplikanata) Svinje: 25 postojećih farmi (+proširenje do 4,000) Perad: 390 postojećih farmi (+proširenje do 300)

101/2: Skladištenje i odlaganje gnojiva

Ciljevi: Smanjenje znja prouzrokovanog gnojivom i silažom (pojednostavljene mjere za farme koje su prevelike ili premalene da bi aplicirale shodno mjeri 101/1)

Opravdani troškovi: Izgradnja prostorija za gnojivo Kupovina mašinerije za rukovanje i razbacivanje gnojiva i muljevite vode

Opravdana veličina preduzeća na kraju ulaganja: 10+ krava 10+ krmača 20+ svinja za tovljenje po ciklusu 500+ kvočki 1,000 + brojlera po ciklusu

Procjena broja potencijalnih aplikanata: Otprilike 50 farmi prevelikih za 101/1 Do 2,000 goveda i 2,000 svinjogojskih farmi ukoliko se procedura održi jednostavnom 101/3: Mašinerija za krmno bilje

Cilj: Speciﬁ čna mjera koja osigurava mašineriju za pravljenje i rukovanje silaže velikih bala i ostale vrtse krmne hrane bilo kome ko pokriva razumno prihvatljivo područje, npr. Mašinski prsten, udruženja farmera i private ugovorene usluge (pojedinačni farmer će aplicira shodno mjeri 101/1).

Opravdani troškovi: Mašinerija za rukovanje krmnoe hrane i traktori i prikolice

Opravdana veličina preduzeća na kraju ulaganja: Prikazan kapacitet i poslovni plan da žetva pokriva najmanje 100 ha krmne hrane za višestruka gazdinstva

PREPORUČENE IPARD MJERE PRERAĐIVAČI OBRADA I MARKETING POLJOPRIVREDNIH PROIZVODA 103

103/1. Unaprjeđenje prerađivačkih postrojenja Ciljevi:

Opšte inves ranje u cilju pružanja pomoći mljekarama i mesnim postrojenjima kako bi: Ispunili EU standard u smislu higijene, dobrobi i okoline Povećanje krentnos putem povećanja veličine, eﬁ kasnijeg funkcionisanja i povećanog obima proizvodnje.

Opravdani troškovi: (Re)konstrukcija objekata Kupovina mašinerije i ﬁ ksirane opreme Izgradnja/unaprjeđenje postrojenja za skladištenje i preradu tekućeg otpada Izgradnja/unaprjeđenje laboratorija za brzo tes ranje pris glog mlijeka i za provjeru krajnjeg proizvoda

Opravdana veličina preduzeća na kraju ulaganja: Mljekare koje redovno obrade više of pet tona mlijeka dnevno. Mesni prerađivači proizvode najmanje pet tona proizvoda po danu.

Procjena broja potencijalnih aplikanata: Pet mljekara i če ri prerađivača mesa su u naznačenim okvirima. 103/2: Skladištenje i odlaganje mljekraskog tekućeg otpada

Cilj: Pojednostavljena mjera kako bi se smanjilo zagađenje a namijenjena za prerađivače koji su preveliki da bi aplicirali u skolopu mjere 103/1.

Opravdani troškovi: Izgradnja/unaprjeđenje postrojenja za skladištenje i preradu tekućeg otpada

Opravdana veličina preduzeća na kraju ulaganja: Najmanje 20 tona otpadnih voda po danu.

Procjena broja potencijalnih aplikanata: Otprilike osam prerađivača.

103/3: Sakupljanje i obrada živo njskog otpada

Cilj: Ulagedno prikupljanje i odalaganje živo njskog otpada u skladu sa EU standardima zbog javnog i živo njskog zdravlja kao i očuvanja okoline

Opravdani troškovi: Izgradnja postrojenjenja za uništavanje ili peći Vozila za prevoz živo njskog otpada (Skladište u postrojenjima je dozvoljeno shodno mjeri 103/1)

Opravdana veličina preduzeća na kraju ulaganja: Nije primjenljivo – vjerovatno će bi jedan ili dva centralna postrojenja koja će opsluživa mnogo operatera/korisnika.

Procjena broja potencijalnih aplikanata: Zavisi od poli čkih izbora između privatnih i javnih ulaganja, s m što će druga opcija sa velikom vjerovatnoćom generisa bilo jednu državnu ili dva regionalna postrojenja za uništavanje i peći. SAŽETAK ZAKLJUČAKA

ZAKLJU ČAK 1: Strukture farmi će se promijeni , ali vremenski polako, a BiH treba da planira ulazak u EU sa stočarskim sektorom kojim dominiraju male farme

 ZAKLJUČAK 2: Broj farmi dovoljno velikih da budu uspješno konkurentne za IPARD grantove je mali, i većina farmi će zah jeva dodatne izvore inves ranja

ZAKLJUČAK 3: Mljekare i proizvođači mlijeka treba da učine svoj asortiman raznolikijim kako bi prodrli na tržište EU – ali imaju male podsticaje na inovacije bez pristupa tržištu

ZAKLJUČAK 4: Kako proces EU integracije povećava pristup je inijem uvoznom mesu, beneﬁ cije od istog će osje prerađivači, ali će to stavi dodatni pri sak na proizvođače

ZAKLJUČAK 5: Najvažniji inves cioni prioritet u preradi koji je relevantan za IPARD je tretman tekućeg otpada i odlaganje otpada

ZAKLJUČAK 6: BiH će teško dobi EU odobrenje za izvoz mesnih proizvoda bez osiguranja uniﬁ ciranog sistema veterinarske kontrole

ZAKLJUČAK 7: Oba en teta treba da preusmjere svoju podršku stočarstvu na manje farme kako bi se pripremile ua pristupanje EU

 ZAKLJUČAK 8: Pristupanje Hrvatske EU će ozbiljno uzdrma stočarski sektor u BiH, sa drama čnim padom izvoza

 ZAKLJUČAK 9: Uprkos ostvarenjima inves cionih banaka i mikro-kreditnih organizacija, kao i obećanja povodom IPARD ﬁ nansiranja, uočena je ogromna neusklađenost između ponude kredita i inves cionih potreba farmi

 ZAKLJUČAK 10: Uspostavljanje efek vnog brojnijeg sistema za pružanje usluga u poljoprivredi je prioritet broj jedan Table of Contents

ABBREVIATIONS AND ACRONYMS vii INTRODUCTION ix 1. EXECUTIVE SUMMARY 1 1.1 B 1 1.1 F 1 1.2 P 4 1.3 P 4 1.4 M 5 1.5 EU 6 1.6 I 6 1.7 I 6 1.8 I 7 1.9 O 7 2. BACKGROUND AND KEY FIGURES 13 2.1 G B H 13 2.2 C 15 2.2.1 General context of the sector analyses: Prepara on for EU accession 15 2.2.2 Sector context 15 2.3 G B H 16 2.4 A 18 2.5 T B H 22 3. FARMERS 23 3.1 M 23 3.1.1 Strengths and weaknesses of each dataset 23 3.1.2 Methodology to combine data sources 24 3.1.3 Comparison of results from diﬀ erent data sources 27 3.2 O 29 3.2.1 Age and succession 29 3.2.2 Farm household income 30 3.3 C 31 3.3.1 Sta s cal overview 31 3.3.2 Typology of ca le farms 32 3.3.3 Ca le breed and herd structure 37 3.3.4 Milk produc on and marke ng 38 3.3.5 Beef produc on and marke ng 42 3.4 S 43 3.4.1 Sta s cal overview 44 3.4.2 Typology of sheep farms 45 3.4.3 Marke ng of sheep meat 47 3.5 P 49 3.5.1 Sta s cal overview 49 3.5.2 Typology of pig farms 50 3.5.3 Marke ng of pig meat 53

i 3.6 P 54 3.6.1 Sta s cal overview 54 3.6.2 Typology of poultry farms 56 3.6.3 Marke ng of poultry meat and eggs 59 3.7 M 61 3.7.1 Sta s cs on animals and milk produc on by species 61 3.7.2 Milking sheep case study 63 3.7.3 Economic issues 64 3.8 E G O 65 3.9 S 66 3.10 S-U B 70 4. PROCESSING 73 4.1 R 73 4.2 F 75 4.2.1 Milk collec on and transport 75 4.2.2 Livestock marke ng 77 4.3 M 78 4.3.1 Recent development of the dairy processing sector 78 4.3.2 Current structure of the dairy processing industry 80 4.3.3 Raw milk deliveries for processing 81 4.3.4 Produc on profi les of dairies 81 4.3.5 Milk and dairy products manufactured 82 4.3.6 Assessment of visited dairies 84 4.3.7 Financial state of dairies 84 4.3.8 Interna onal comparisons 84 4.4 M 85 4.4.1 Background 85 4.4.2 Raw material sources 85 4.4.3 Slaughtering 86 4.4.4 Processing plants 87 4.4.5 Product range 88 4.4.6 The market 89 4.4.7 Management and fi nance 89 4.4.8 Meat processing survey 89 4.5 C 91 5. GOVERNMENT POLICY FOR THE SECTOR 93 5.1 P- 93 5.2 S 93 5.2.1 State level strategy 93 5.2.2 Strategy within the Federa on of Bosnia and Herzegovina 96 5.2.3 Strategy within Republika Srpska 97 5.2.4 Strategy within Brčko District 98 5.2.5 Conclusions on the strategic planning framework 99 5.3 D 99 5.3.1 Livestock support in Federa on of Bosnia and Herzegovina 99 5.3.2 Livestock support in Republika Srpska 104 5.3.3 Livestock support in Brčko District 105 5.3.4 Average support payments received 105 ii 5.4 T 105 5.5 R 107 5.6 C 109 6. MARKETS AND TRADE 111 6.1 O 111 6.1.1 Factors underlying the current situa on 111 6.2 D 113 6.2.1 Marke ng of milk and dairy products 113 6.2.2 The market for milk and dairy products 114 6.2.3 Domes c market channels 114 6.3 I 116 6.3.1 Trade balance by product 117 6.3.2 Principal trading partners 119 6.3.3 The threat of EU enlargement 124 6.4 S 125 6.5 T - 125 6.6 S 129 7. LEVEL OF ATTAINMENT OF RELEVANT EU STANDARDS 131 7.1 EU 131 7.2 S 131 7.2.1 Animal health 131 7.2.2 Animal welfare 131 7.2.3 Animal iden fi ca on 134 7.3 M 134 7.3.1 EU standards in force 134 7.3.2 Recent ac ons to achieve EU standards 135 7.3.3 Factors aff ec ng milk quality 137 7.4 S 138 7.4.1 Dairy processors 138 7.4.2 Meat processors 138 7.5 E EU 139 7.6 C EU 139 8. INVESTMENT TRENDS AND FUTURE DEVELOPMENTS 141 8.1 R 141 8.1.1 Investments on farms 141 8.1.2 Investments in processing 141 8.2 T B H 142 8.2.1 Financing through commercial banks 143 8.2.2 Lending through microcredit organiza ons and companies 146 8.2.3 Lending through savings and credit organiza ons 148 8.2.4 Guarantee Funds 149 8.2.5 Leasing 150 8.3 P 150 8.4 C 151 9. IDENTIFICATION OF POTENTIAL AND NEEDS OF THE SECTOR 153 9.1 M 153

iii 9.2 S, W, O T (SWOT) 153 9.2.1 Strengths 154 9.2.2 Weaknesses 154 9.2.3 Opportuni es 155 9.2.4 Threats 156 9.3 SWOT 157 9.4 I 158 9.4.1 Infrastructure on ca le farms 158 9.4.2 Infrastructure on sheep farms 159 9.4.3 Infrastructure on pig farms 159 9.4.4 Infrastructure on poultry farms 159 9.5 T EU 159 9.5.1 Ca le 159 9.5.2 Sheep 164 9.5.3 Pigs 165 9.5.4 Poultry 167 9.5.5 Processors 168 9.6 B 168 9.6.1 Ca le 169 9.6.2 Sheep 173 9.6.3 Pigs 175 9.6.4 Poultry 177 9.6.5 Livestock farm structures 180 9.7 E - 180 9.7.1 Poten al changes in farm structures 181 9.7.2 Investment costs 187 9.7.3 Investment requirements 189 9.8 C: I 190 9.8.1 Priority investments on farms 191 9.8.2 Priority investments in processing 192 10. IDENTIFICATION OF TRAINING NEEDS IN THE SECTOR 193 10.1 C , 193 10.2 G EU 194 10.3 T 194 10.4 T 196 10.5 T 198 10.6 C 198 11. OUTCOMES 199 11.1 S 199 11.1.1 Key investment needs 199 11.1.2 Key constraints 199 11.1.3 Farm size distribu on 199 11.2 P IPARD 200 11.2.1 Measure 101/1: Improvement and enlargement of agricultural holdings 200 11.2.2 Measure 101/2: Manure storage and disposal 201 11.2.3 Measure 101/3: Forage machinery 202 11.2.4 Measure 103/1: Improvement of processing facili es 202 11.2.5 Measure 103/2: Dairy eﬄ uent storage and treatment 202 iv 11.2.6 Measure 103/3: Animal waste collec on and processing 202 11.2.7 Measures considered but rejected 202 11.3 S EU 203 11.3.1 Improving the policy and regulatory environment 203 11.3.2 Improving eﬃ ciency through extension and training 203 ANNEX 1: ANALYSIS OF POULTRY NUMBERS 205 ANNEX 2: SWOT WORKSHOP CONCLUSIONS 209 ANNEX 3: PROCESSING SURVEY QUESTIONNAIRES 215 ANNEX 4: PROCESSING CASE STUDIES 219 ANNEX 5: MILK SAMPLING NUMBERS 225 ANNEX 6: CHECKLIST FOR AN EUSTANDARD DAIRY FARM 229 ANNEX 7: ESTIMATED FARM AND ANIMAL NUMBERS BY ENTITY 231

v vi Abbrevia ons and Acronyms

AMIS Agricultural Market Informa on System BAM BiH currency; 1 EUR = 1.9558 BAM BD Brčko District BHAS Bosnia and Herzegovina Agency for Sta s cs BHMAC Bosnia and Herzegovina Mine Ac on Centre BiH Bosnia and Herzegovina CAP Common Agricultural Policy CEFTA Central European Free Trade Agreement EU European Union EUD Delega on of the European Union to Bosnia and Herzegovina EUR Euro FADN Farm Accountancy Data Network FAO Food and Agriculture Organiza on of the United Na ons FBiH Federa on of Bosnia and Herzegovina FSA Food Safety Agency FVO Food and Veterinary Oﬃ ce GAECs Good Agricultural and Environmental Condi ons GAEP Good Agricultural and Environmental Prac ce GAP Good Agricultural Prac ce GDP Gross Domes c Product GoBiH Government of BiH GVA Gross Value Added Ha hectare HACCP Hazard Analysis Cri cal Control Points I&R Iden ﬁ ca on and Registra on (system) IDB Investment Development Bank IFAD Interna onal Fund for Agricultural Development IFS Interna onal Food Standard IPARD Instrument for Pre-Accession Assistance for Rural Development IPHC Interna onal Plant Health Conven on ISO Interna onal Organiza on for Standardiza on Kg kilogram LSU livestock unit LU Legal Unit MCO microcredit organiza on MoFTER Ministry of Foreign Trade and Economic Rela ons MS Master Sample NGO non-governmental organiza on NVA Net Value Added PAC Pilot Agricultural Census PHPA Plant Health Protec on Administra on PPP Power Point Presenta on RASFF Rapid Alert System for Food and Feed RS Republika Srpska SAA Stabilisa on and Associa on Agreement SAFFRD Sector for Agriculture, Food, Forestry and Rural Development SAPARD Special Accession Programme for Agriculture and Rural Development

vii SAPS Single Area Payment Scheme SCC Soma c Cell Count SESMARD Support for Establishment of the State Ministry of Agriculture and Rural Development SIDA Swedish Interna onal Development Coopera on Agency SPS Single Payment Scheme SWOT Strengths, Weaknesses, Opportuni es and Threats (analysis) TBC total bacterial count UNDP United Na ons Development Programme UPOV Interna onal Union for the Protec on of New Varie es of Plants VAT Value Added Tax WB World Bank WTO World Trade Organiza on

Currency Equivalents

Exchange rates

USD for 1 EUR 2005- 2009 1.3483

BAM for 1 USD 2012 1.58557

BAM for 1 EUR Since 2002 – 1.95583

European Central Bank: h p://www.ecb.int/

viii Introduc on

This is one of fi ve sector analyses (Meat and . Survey fi eldwork: Dairy; Fruit and Vegetables; Cereals; Wine; • Agricultural extension service, Republika Diversifi ca on) prepared between spring Srpska 2011 and spring 2012 for the agricultural • Team of assistants from the Sarajevo authori es in Bosnia and Herzegovina (BiH) Faculty of Agriculture and Food Science at state, en ty and Brčko District level. The . sector analyses are inputs for use during the Support: design of measures to be fi nanced under the • Vlado Pijunović, background papers European Union (EU) Instrument for Pre- • Zorica Jovanović, desk research accession Assistance for Rural Development The report was reviewed by Gerold (IPARD).1 They are also for use during the Boedeker, Magali Herranz, Raimund Jehle, design of en ty level interven ons in general. Andriy Rozstalnyy and Dmitry Zvyagintsev (all The analyses were commissioned by the EU FAO). Valuable support regarding language and monitored by task manager Ms Timea edi ng was provided by Tom Hunter and Makra, EU Delega on in Sarajevo. The analyses Valerie Guidi. were coordinated by Mr Morten Kvistgaard, Interna onal Team Leader under the overall Acknowledgements management of Mr Gerold Boedeker, Budget Holder and Mr Raimund Jehle, Lead The FAO team would like to extend its Technical Offi cer, Regional Offi ce for Europe sincere thanks for the assistance and close and Central Asia of the Food and Agriculture collabora on in the implementa on of the Organiza on of the United Na ons (FAO) in project to the following organiza ons and Budapest. individuals: . BiH Ministry of Foreign Trade and Economic Further informa on on the studies themselves Rela ons (MoFTER): and on the IPARD planning process is provided in Chapter 2 of this report. • Dušan Nešković, Assistant Minister • Melisa Ljuša, Expert Advisor, Policy Study team Analysis, and key daily contact This study was conducted by the following • Ms Jelena Prorok, Expert Advisor team: . Federa on of BiH (FBiH), Ministry of . Core team: Agriculture, Water Management and Forestry: • Dr Steve Goss • Contact point, Kasbašić Azijada • John Howells (processing) . Republika Srpska (RS), Ministry of Agriculture, • Dr Željko Vaško, Dr Ljiljana Drinić and Forestry and Water Management: Dr Gordana Rokvić, University of Banja Luka, Ins tute of Agricultural Economics • Contact point, Marko Srdić • Dr Aleksandra Nikolić and Dragan . Brčko District, Department of Agriculture, Ognjenović, Faculty of Agriculture and Forestry and Water Management: Food Science, University of Sarajevo2 • Contact point, Abdulah Ribić

1 The fi nal concept for pre-accession assistance to agriculture and rural development a er 2013 is not yet known, and it may be diff erent from the current IPARD model. As a ma er of simplicity, reference is made to IPARD throughout the sector analyses. 2 The University of Sarajevo team managed the farm survey and SWOT workshops in FBiH but did not par cipate in the analysis or dra ing of the report. Dra s of the report were submi ed to them for comment before being fi nalised.

ix . BiH Agency for Sta s cs . FBiH Federal Oﬃ ce of Sta s cs . RS Ins tute of Sta s cs . BiH Agency for Animal Iden ﬁ ca on . EU-funded project on “Agricultural Informa on Systems”, led by Colin Sco . Vlado Cirko, for wide-ranging logis cal support

x 1. Execu ve summary

This document follows the standard format comprehensive es mates of fl ock and herd of an IPARD sectoral study, with the analysis numbers, animal numbers, and milk and developing progressively through the meat produc on and marke ng for each farm chapters as follows: type, with es mates of value and volume. 1.1 Background and key fi gures –Key fi nding 3: The livestock sector is dominated by a large number of very Chapter 1 provides a general introduc on small holdings (see Table 1.1) to Bosnia and Herzegovina and its livestock sector, prepared for each of the fi ve sectoral –Key fi nding 4: The number of “commercial” studies on the basis of published sta s cs. farms is very small, though producing the majority of poultry output and a moderate –Key fi nding 1: Livestock is the most propor on of total sheep important sector in BiH agriculture BiH livestock farms can be split into three . Total GDP: € 12.7 billion sectors: . Agriculture GDP: € 930 million (7 percent) . Household sector, producing mainly for . Livestock output: € 900 million (farm-gate own consump on plus some informal sale value) • Ca le = 1 cow Sheep = 1-5 ewes/fa ening lambs –Key fi nding 2: Over 300,000 agricultural • holdings keep some kind of livestock, • Pigs = 1 sow/1-3 fa ening pigs which makes a signifi cant contribu on to • Poultry = 1-20 laying hens/1-50 broilers household income . Commercial sector, larger farms producing predominantly for sale to registered On the surveyed farms: slaughterhouses and dairies: . Milk and dairy products contributed 20 percent Ca le = over 20 cows of household income • • Sheep = over 100 ewes . Meat and livestock contributed 50 percent of household income • Pigs = over 20 sows/200 fa ening pigs per cycle 1.1 Farmers • Poultry = over 500 laying hens/1,000 Chapter 2 presents the key sta s cal data broilers per cycle and then develops a quan ta ve descrip on . Small farm sector, all other farms, i.e. and typology of livestock farms in Bosnia those that produce mainly for sale, but are and Herzegovina; and brings together s ll below the size that would normally be sta s cal data and the fi ndings of a farm regarded as an economically-viable full- survey conducted for this study to create me farm in western Europe

Table 1.1: Number of farms and animals Species Farms Total head Breeding females 381,000 223,000 Ca le 161,000 (av. 2.4) (av. 1.4 cows) 1,515,000 1,059,000 Sheep 63,000 (av. 24 sheep) (av. 17 ewes) 585,000 82,000 Pigs 127,000 (av. 4.6 pigs) (av. 0.7 sows) 188,000 (layers) 6.6 million 5.5 million Poultry 29,000 (broilers) (av. 227 hens) (av. 26 hens)

1 Graph 1.1: Number of farms by sector

The commercial farm sector accounts for a –Key ﬁ nding 6: Household use and informal very small number of farms for every species, marke ng are very important, especially with the following es mated numbers: for milk, sheepmeat and pigmeat . Ca le: 400 farms (0.25 percent) Livestock products are marketed through . Sheep: 1,000 farms (1.6 percent) three main channels: . Pigs: 25 farms (0.02 percent) . Household: Use of milk, eggs, home-made . Poultry: 600 farms (0.3 percent) dairy products and home-killed meat by the –Key ﬁ nding 5: Farms with 1-5 cows produce extended farm family. 85 % of the total milk supply and 60 % of . Informal marke ng: Sale of milk and eggs the supply to dairies direct to local consumers or through green

Graph 1.2: Number of animals by sector

2 Graph 1.3: Marke ng channels for milk, meat and eggs

markets; sale of livestock for slaughter by –Key ﬁ nding 7: Per capita meat consump on butchers, restaurants and families. is typical for the region, with the balance . Formal marke ng: Sale of milk to dairies between species reﬂ ec ng local condi ons and livestock to registered slaughterhouses. and preferences

Graph 1.4: Annual meat consump on per capita

3 CONCLUSION 1: Farm structures will change, Processors report that: but slowly, and BiH should plan on . Local meat is up to 30 % more expensive entering the EU with a livestock sector than imports dominated by small farms . Quality of imported meat is quite adequate CONCLUSION 2: The number of farms large for processing enough to compete successfully for . They would like to use more imported meat IPARD grants is small, and most farms will require other sources of investment –Key fi nding 17: The range of meat products is tradi onal, targe ng the local and 1.2 Processors CEFTA markets, with good quality control and packaging Chapter 3 provides a systema c descrip on of formal milk and meat processing in –Key fi nding 18: Meat processing plants Bosnia and Herzegovina, based heavily on are generally in good condi on, but red a face-to-face survey of processors carried meat slaughterhouses need considerable out by the project team. investment –Key fi nding 8: The processing sector –Key fi nding 19: BiH has no adequate has recovered a er the war, in some system to dispose of slaughterhouse waste cases managing to “leap-frog” past and fallen stock neighbouring countries CONCLUSION 3: Dair ies and meat processors –Key fi nding 9: Milk collec on is diverse, will need to diversify their product range including collec ng centres and middlemen to penetrate EU markets – but have li le as well as direct collec on by dairies, and incen ve to innovate without market some raw milk is not yet cooled access –Key fi nding 10: Daily milk collec on per farm CONCLUSION 4: As EU integra on increases is small (av. 26 litres), increasing unit cost access to cheaper imported meat, it will benefi t processors but increase pressure –Key fi nding 11: Raw milk tes ng works on producers well in RS but not yet in FBiH CONCLUSION 5: The top investment priority –Key fi nding 12: Milk processing is bimodal in processing relevant to IPARD is effl uent . More than 75 % of collected milk is treatment and waste disposal processed by 7 dairies 1.3 Policy . Around 50 dairies, plus an unknown number of micro-dairies, process the other 25 % Chapter 4 outlines the na onal support, –Key fi nding 13: Most dairies concentrate regulatory and trade policies aff ec ng on established regional products, with the livestock farm and processing sectors; larger dairies also producing UHT milk includes a common introduc on on state- and en ty-level strategies, developed for –Key fi nding 14: Most dairies are in good all fi ve sectoral studies. technical and fi nancial condi on, and almost all have HACCP cer fi ca on –Key fi nding 20: BiH’s unique administra ve structure creates special challenges in –Key fi nding 15: Major needs are in-house policy making, implementa on and laboratories and, especially, proper enforcement effl uent disposal –Key fi nding 21: Livestock subsidies in both –Key fi nding 16: Meat processing combines en es favour larger farms and mainly local supplies with cheaper imports pursue social rather than development goals

4 Graph 1.5: BiH external trade for the livestock sector in 2010

CONCLUSION 6: BiH will struggle to achieve analysis of trade data and iden fi es EU export approval for livestock products Bosnia’s principal trading partners for without a more unifi ed veterinary control each class of livestock product; presents a system supply-u lisa on balance, in value terms, for the en re livestock sector. CONCLUSION 7: Both en es should re- direct their livestock support to help –Key fi nding 22: BiH runs a substan al trade smaller farms prepare for EU accession defi cit in livestock products and is heavily dependent on Croa a as an export market 1.4 Marke ng –Key fi nding 23: Small-scale produc on Chapter 5 reviews the variety of domes c and informal marke ng make an essen al marke ng channels employed for livestock contribu on to na onal food supply and and their products; presents a systema c balance of payments

Graph 1.6: Value of livestock product imports and exports by trading partners for 2010

5 Graph 1.7: Poten al eﬀ ect on trade balance of curtailing informal marke ng and household use of livestock products

CONCLUSION 8: Croa a’s accession to the EU –Key fi nding 26: Access to credit is a will give a serious shock to the BiH livestock signifi cant constraint for livestock sector, with a drama c drop in exports producers, par cularly small farms 1.5 EU standards CONCLUSION 9: Despite the achievements Chapter 6 provides an overview of where of investment banks and micro-credit Bosnia and Herzegovina currently stands organisa ons, and the promise of IPARD in rela on to each element of the acquis funding, there is a massive shor all communautaire for the livestock sector; between credit supply and farm notes that Bosnia and Herzegovina does investment needs not as yet have EU approval to export any 1.7 Iden fi ca on of poten als and farmed livestock or their products. needs of the sector –Key fi nding 24: Livestock farms fall short of EU standards in three main areas: manure Chapter 8 presents SWOT analyses for storage & handling, animal welfare, and both livestock farms and processors, based milk hygiene on stakeholder workshops held in Sarajevo and Banja Luka; presents the fi ndings of –Key fi nding 25: Processors fall short of the project farm survey on the current EU standards in four main areas: red status of infrastructure on livestock farms meat slaughtering, slaughterhouse waste and their investment needs; assesses how disposal, liquid effl uent treatment, and EU integra on will impact on each livestock raw milk tes ng farm type; establishes benchmarks to put 1.6 Investment the BiH livestock sector in a European and regional context; predicts the future  Chapter 7 reviews recent investments in structure of the sector based on survey livestock farms and processing plants; responses and es mates total investment discusses the availability of commercial requirements; summarises investment credit, ins tu onal credit and government priori es for livestock farms and processors. subsidies; presents a comprehensive picture of the agricultural fi nance sector –Key fi nding 27: Investment priori es refl ect prepared for all fi ve sector studies. the shor alls from EU standards, plus

6 the need to increase scale and technical –Key fi nding 29: The implica ons of EU effi ciency accession for livestock farms stem directly from their structure . Producers: • Herd/fl ock enlargement (esp. dairy; but . Ca le (160,000 holdings) note that livestock purchases are not ◊ Major structural problem in dairy eligible for IPARD funding) produc on, with a need to help smaller • Buildings & equipment (esp. dairy) farms adapt to the changing situa on; • Machinery (esp. forage) less serious situa on in beef produc on. • Manure storage & handling (esp. ca le & . Sheep (50,000 holdings) pigs) ◊ Less serious structural problem, as even . Dairy processors: smaller farms can be EU-compliant and • Plant upgrading to improve opera ng commercially viable, though only the larger effi ciency & product range farms are likely to par cipate in IPARD. • In-house laboratories to improve product . Pigs (130,000 holdings) quality ◊ Big problem of compe veness, which is • Effl uent storage & treatment to meet likely to see many small pig farms cease environmental standards produc on; only the larger farms are . Meat processors: likely to have a long-term commercial • Plant upgrading to improve opera ng future, and these could benefi t greatly effi ciency from IPARD assistance. • Animal waste storage, transport & . Poultry (220,000 holdings) disposal • Laying hens: ◊ Current bi-modal structure is sustainable, 1.8 Iden fi ca on of training needs in as the numerous small farms are the sector essen ally non-commercial; many large commercial farms will require substan al Chapter 9 outlines the exis ng structures assistance to adapt to EU standards. to provide training, advice and informa on to the livestock sector; presents a short • Broilers: summary of the key training priori es for ◊ Smaller broiler farms have li le diff erent groups of benefi ciaries, including commercial future; IPARD investment farmers, processors and inspectors. should focus on helping large broiler farms to adapt to EU standards, increase –Key fi nding 28: Current extension services effi ciency and con nue to expand. are inadequate to help 300,000 livestock farmers meet EU standards and improve –Key fi nding 30: Three IPARD measures technical effi ciency, management & are proposed for livestock producers, and marke ng three for processors . Modernisa on of agricultural holdings (101): CONCLUSION 10: Developing an eff ec ve a. 101/1: Improvement & enlargement of mass extension system is a top priority agricultural holdings b. 101/2: Manure storage & disposal 1.9 Outcomes c. 101/3: Forage machinery Chapter 10 summarises the key factors . Processing and marke ng of agricultural to be taken into account when designing products (103): investment measures for the BiH livestock d. 103/1. Improvement of processing facili es sector; presents proposals for six specifi c e. 103/2: Dairy effl uent storage & treatment measures to be funded under the IPARD f. 103/3: Animal waste collec on & programme. processing

7 R IPARD – F M (101)

101/1: Improvement & enlargement of agricultural holdings

Objec ves: Achieving EU standards for hygiene, animal welfare & environment Increasing compe veness through herd/ﬂ ock enlargement and improving eﬃ ciency

Eligible expenditure: Construc on & reconstruc on of buildings Construc on of manure stores Purchase of machinery and equipment

Eligible enterprise size at end of investment: 20 – 200 cows 100 – 5,000 breeding ewes 20-500 sows 200-5,000 fa ening pigs per cycle 500-50,000 laying hens 1,000 – 100,000 broilers per cycle

Es mated number of poten al applicants: Ca le: 230 current farms (+ up to 300 expanding) Sheep: 1,000 current farms (low applica on rate expected) Pigs: 25 current farms (+ up to 4,000 expanding) Poultry: 390 current farms (+ up to 300 expanding)

101/2: Manure storage & disposal

Objec ves: Reducing pollu on from manure & silage (simpliﬁ ed measure for farms that are too large or too small to apply under 101/1)

Eligible expenditure: Construc on of manure stores Purchase of machinery for handling & spreading manure & slurry

Eligible enterprise size at end of investment: 10+ cows 10+ sows 20+ fa ening pigs per cycle 500+ laying hens 1,000 + broilers per cycle

Es mated number of poten al applicants: Approx. 50 farms too large for 101/1 Up to 2,000 ca le & 2,000 pig farms if procedure kept simple

8 101/3: Forage machinery

Objec ve: Speci ﬁ c measure to provide machinery for making and handling big-bale silage and other kinds of forage, to anyone who will cover a reasonable area, e.g. machinery rings, farmers’ associa ons and private contrac ng services (individual farmers would apply under measure 101/1).

Eligible expenditure: Forage-handling machinery and associated tractors & trailers

Eligible size by end of investment: Demonstrated capacity & business plan to harvest at least 100 ha of forage for mul ple holdings

9 R IPARD – P P (103)

103/1. Improvement of processing facili es

Objec ves: General investment with the aim of helping dairies & meat plants to: Meet EU hygiene, welfare &/or environmental standards Increase compe veness through increased size, more eﬃ cient opera on and increased product range.

Eligible expenditure: (Re)construc on of buildings Purchase of machinery and fi xed equipment Construc on/upgrading of effl uent storage & treatment facili es Construc on/upgrading of in-house laboratories for rapid tes ng of incoming milk and for checking fi nal products

Eligible size by end of investment: Dairies opera ng regularly at more than ﬁ ve tonnes daily milk intake. Meat processors producing at least ﬁ ve tonnes of products per day.

Es mated number of poten al applicants: Five dairies and four meat processors are known to be within this size range.

103/2: Dairy eﬄ uent storage & treatment

Objec ve: Simpliﬁ ed measure speciﬁ cally to reduce pollu on aimed at processors that are too large to apply under 103/1.

Eligible expenditure: Construc on/upgrading of eﬄ uent storage & treatment facili es

Eligible size by end of investment: At least 20 tonnes of waste water per day.

Es mated number of poten al applicants: Approximately eight processors.

10 103/3: Animal waste collec on & processing

Objec ve: Investment for the safe collec on & disposal of animal waste in line with EU standards for public & animal health and the environment Eligible expenditure: Construc on of rendering plant or incinerator Vehicles for transport of animal waste (Storage at plants is eligible under 103/1) Eligible size by end of investment: Not applicable – would probably be one or two central facili es to serve many operators. Es mated number of poten al applicants: Depends on poli cal choices between private and public investment, with the la er approach like to generate either one na onal or two regional rendering plants or incinerators.

S C  CONCLUSION 1: Farm structures will  CONCLUSION 6: BiH will struggle to change, but slowly, and BiH should plan achieve EU export approval for livestock on entering the EU with a livestock sector products without a more uniﬁ ed dominated by small farms veterinary control system

 CONCLUSION 2: The number of farms  CONCLUSION 7: Both en es should large enough to compete successfully for re-direct their livestock support to help IPARD grants is small, and most farms smaller farms prepare for EU accession will require other sources of investment  CONCLUSION 8: Croa a’s accession to  CONCLUSION 3: Dairies and meat the EU will give a serious shock to the BiH processors will need to diversify their livestock sector, with a drama c drop in product range to penetrate EU markets exports – but have li le incen ve to innovate without market access  CONCLUSION 9: Despite the achievements of investment banks and  CONCLUSION 4: As EU integra on micro-credit organisa ons, and the increases access to cheaper imported promise of IPARD funding, there is a meat, it will beneﬁ t processors but massive shor all between credit supply increase pressure on producers and farm investment needs

 CONCLUSION 5: The top investment  CONCLUSION 10: Developing an eﬀ ec ve priority in processing relevant to IPARD mass extension system is a top priority is eﬄ uent treatment and waste disposal

11 12 2. Background and key ﬁ gures

This sec on provides a general background mul party elec ons were held in Bosnia and to Bosnia and Herzegovina and its economy Herzegovina and, in early 1992, it became an and agriculture, developed for all ﬁ ve of the independent country. sectoral studies. Bosnia and Herzegovina has borders with . Sec on 2.1 presents general informa on Serbia to the east, Montenegro to the south- about t he country. east, Croa a to the north and west, and a 20 . Sec on 2.2 explains the context and kilometre coastline on the Adria c Sea. Its objec ve of the sector studies. landscape varies from high al tude mountains . Sec on 2.3 gives some further informa on in the centre, to arable land in the north and on the BiH economy as a whole. Mediterranean vineyards in the south, with . Sec on 2.4 reviews the main agricultural most of the major towns being located in indicators and sta s cs. valleys. Clima cally, Bosnian summers last from May to September and are warm and 2.1 General informa on about humid, whilst winters tend to be foggy and Bosnia and Herzegovina snowy and last from November to February. Autumn and spring are usually short. Bosnia and Herzegovina (BiH), one of the cons tuent republics of the former Within Bosnia and Herzegovina’s recognized Yugoslavia, is located in the western part borders, the country is divided into two of the Balkan peninsula and covers an area en es and the Brčko District (BD). The of 51,129 km2. In 1990, the ﬁ rst democra c Federa on of Bosnia and Herzegovina (FBiH)

Fact box 1: Key features of Bosnia and Herzegovina

• Popula on: 3.84 million (BiH Sta s cal Agency, • Life expectancy: 72 years (men), 78 years (women) 2011) (United Na ons) • Major languages: Bosnian, Croa an and Serbian • Capital: Sarajevo

Figure 2.1: Map of BiH ci es

13 This territorial and administra ve division is shown in the following map: Figure 2.2: Administra ve division of Bosnia and Herzegovina

Legenda:

DB - DISTRIKT BRČKO

covers about 50 percent of the territory and The Government of FBiH delegates some Republika Srpska (RS) covers about 49 percent of its competencies to the Cantonal of the territory. BD covers the remaining one administra ons. Both the Government and percent of the total territory. the Cantons have the right to determine This territorial and administra ve division is policy and to adopt laws that fall within their shown in the following map: competencies. Where competencies are further delegated to the municipali es (the The current administra ve divisions are based lowest administra ve level), their ac vi es on the lines drawn up as part of the Dayton are ﬁ nanced and supervised by the Cantons. Peace Agreement in 1995. The structure is comprised of a state level Council of Ministers The en ty of Republika Srpska is more and the governance structures of the two centralized and has no Cantons. It delegates en es and Brčko District. The en es enjoy some of its competencies to 63 municipali es substan al autonomy and each has its own and a number of ci es. cons tu on. Brčko District (comprising the en re territory The en ty of FBiH is very decentralized, of the former Brčko municipality) is a being divided into 10 Cantons (each with selfgoverning administra on under the direct its own government) and 80 municipali es. jurisdic on of BiH.

Fact box 2: Key economic features

. GDP: EUR 12,678 million (2010) . Agricultural GDP: EUR 927 million (2009) . GDP per capita: EUR 3,300 (2010)

14 Since the Dayton Peace Agreement, the EU exports to the country have been granted country has made remarkable progress in trade preferences. postconfl ict reconstruc on, social integra on and state building.3 Based on its economic It was a milestone on Bosnia and Herzegovina’s recovery and sustained social stability, road to Europe that it and the EC signed the which have been supported by high levels Financing Agreement for the “Instrument for of interna onal assistance, the country Pre-accession Assistance” (IPA) 2007 Na onal is now working towards accession to the Programme on 31 July 2008. The total fi nancial European Union and membership in the alloca on within IPA is EUR 11.47 billion World Trade Organiza on. (current prices) over the 2007–2013 period. The popula on is es mated at a li le less than As a pre-candidate country, Bosnia and 4 million, but a precise fi gure is not available, Herzegovina cannot yet take full advantage of since there has been no recent census. The IPA support, as certain aspects of the support last popula on census was carried out in only apply to Candidate Countries. However, 1991 and major popula on movements have prepara ons are already being made to taken place since then, par cularly during the implement the full IPA programme, including confl ict of the early 1990s.The offi cial fi gure of IPARD support for agricultural and rural 3.8 million, given by the BiH Sta s cal Agency, development, once BiH receives Candidate is used in FAO sta s cs and for calcula ons in Country status. this report. 2.2.2 Sector context 2.2 Context and objec ve of the In order for Bosnia and Herzegovina to benefi t sector analyses from the pre-accession assistance under the IPARD, it must: 2.2.1 General context of the sector . Achieve candidate country status analyses: Prepara on for EU . Have an IPARD Programme adopted by the accession European Commission Bosnia and Herzegovina is a poten al . Conclude the Framework and Sectoral candidate country for EU accession following Agreements the Thessaloniki European Council of June . Establish IPARD opera onal structure and 2003. In June 2008, the EU and Bosnia and receive na onal accredita on Herzegovina signed a “Stabilisa on and Associa on Agreement” (SAA). An “Interim . Receive accredita on and conferral of Agreement on Trade and Trade-related management decisions from the Commission Issues” entered into force on 1 July 2008 and . Conclude a Mul -annual Financing a new European partnership with Bosnia and Agreement Herzegovina was adopted by the Council on The IPA Implemen ng Regula on (718/2007) 18 February 2008.4 (Ar cle 184, Paragraph “2.b”) indicates that Bosnia and Herzegovina has benefi ted from the IPARD Programme should be based on EU autonomous trade measures since 2000. an analysis of the current situa on in rural A er the Interim Agreement came into force areas and on in-depth analysis of the sectors on 1 July 2008, EU access to products from concerned.5 Among other things, the IPARD Bosnia and Herzegovina has expanded, and programme should include a quan fi ed

3 Ministry for Human Rights and Refugees in BiH 4 See EU Delega on Website for Bosnia and Herzegovina: h p://www.delBIH.ec.europa.eu/ 5 The fi nal concept for pre-accession assistance to agriculture and rural development a er 2013 is not yet known, and it may be diff erent from the current IPARD model, and the new regula on might diff er from the current IPA Implemen ng Regula on (718/2007). As a ma er of simplicity reference is made to IPARD in the sector analyses.

15 descrip on of the current situa on, showing The sector analyses provide a comprehensive dispari es, shortcomings and poten al for analysis of the current state of the sectors. They development. The programme should also iden fy the weaknesses and sector concerns include quan fi ed objec ves. The analyses of to be addressed by the IPARD interven on the situa on and priori za onof the areas for and by other state, en ty and district level poten al interven on should be made with interven ons. Where appropriate the sector the help of independent exper se. analyses take into account specifi c regional development needs. Bearing this in mind, the main objec ve of the sector analyses is to provide a solid input Report structure to the prepara on of the IPARD Programme and provide the grounds for jus fi ed and This sector analysis follows a standard appropriate targe ng of the measures structure applied in all sectors and pre- included in the IPARD Programme. Therefore, candidate countries, and covers: the sector studies are not a part of the IPARD . Background and key fi gures for the sector Programme as such, but rather cons tute a . Structural characteris cs of the sector: basic input to the programming process. Producers and processing industry Furthermore, it should be emphasized that . Government policy for the sector at state the na onal authori es may use the sector and en ty level studies as inputs for the prepara on of any . Markets and trade interven on targe ng the agricultural and . Level of a ainment of relevant EU standards rural sectors. As such the sector studies do . Past trends and future developments in not exclusively contribute to the prepara on terms of investment of the IPARD Programme. . Iden fi ca on of poten als and needs of the IPARD support will, if so decided, address sector the weaker links in the produc on and . Iden fi ca on of training needs in the sector supply chains. The objec ves of the IPARD . interven on are to contribute towards Outcome: As an outcome, the analysis of upgrading to EU standards, strengthening the sector provides: overall compe veness and performance as • A transparent overview of the sector well as fostering the sustainable development containing a quan ta ve and qualita ve of the sector in the context of EU accession. descrip on of the situa on; In this respect, the sector analyses have been • Detailed analysis of poten al and obstacles undertaken for the most demanding sectors in the produc on and marke ng chain; in terms of the costs of mee ng the standards, • Recommenda ons for targe ng of specifi c for which the highest poten al and added- IPARD investments, primarily focusing on value of the interven on is an cipated. the weakest links in supply chain. The agricultural sector analyses carried out in Bosnia and Herzegovina have been selected 2.3 General economic indicators for based on a consulta on process with local Bosnia and Herzegovina authori es and are based on EU standard This sec on of the report provides basic relevance as well as economic relevance. economic informa on about the development Analyses have been prepared for: of the BiH economy. . Meat, including rendering, and Dairy The development from 2004 to 2010 in Gross . Fruits and Vegetables Domes c Product (GDP) is presented in the . Cereals (wheat and maize) table below. The economy demonstrated . Wine very posi ve performance from 2004 to 2008 . Diversifi ca on with an average yearly growth of 13 percent

16 Table 2.1: Development of GDP in BiH from 2004 to 2010

Item 2004 2005 2006 2007 2008 2009 2010 GDP BiH, million KM 15,946 17,157 19,272 21,778 24,718 24,004 24,484 GDP BiH, million EUR 8,136 8,754 9,833 11,111 12,611 12,247 12,678 GDP BiH per capita, KM 4,150 4,464 5,015 5,668 6,433 6,246 6,371 Popula on, BiH, million 3.842 3.843 3.843 3.842 3.842 3.843 3.843 Source: Agency for Sta s cs BIH, own calcula ons, exchange rate KM to EUR = 1.9558 all years.

Table 2.2: Annual GDP growth from 2004 to 2010, various countries

Country 2005 2006 2007 2008 2009 2010 BiH + 7.6% + 12.3% + 13.0% + 13.5% - 2.9% + 3.5% Croa a + 4.3% + 4.9% + 5.1% + 2.1% - 5.8% - 1.8% TfYR + 4.1% + 4.0% + 5.9% + 10.0% - 0.9% + 1.3% Macedonia EU 27 + 2.0% + 3.2% + 3.0% + 0.5% - 4.2% + 1.8% Source: Agency for Sta s cs BIH, own calcula ons, EUROSTAT

(in current prices), un l the interna onal behind most of the countries in the region ﬁ nancial crises changed the situa on (Table 2.3). drama cally. 2009 was a year of decline, while 2010 brought the economy back on a The Table 2.4 gives a breakdown of Gross posi ve track at the same level as in 2008. Domes c Product by en ty: (Table 2.1). The contribu on of each en ty to state The performance of Bosnia and Herzegovina level GDP is quite stable over the period, rela ve to other countries in the region is even though an increase in the share of shown in the Table 2.2. RS is observed from 32 percent in 2004 to 34 percent in 2009. FBiH and BD have both The GDP per capita in 2007, where comparable experienced a decrease in their contribu on data are available, shows that BiH was lagging to the overall economy from 2004 to 2009.

Table 2.3: Per capita GDP in 2007, various countries TfYR Country Croa a BiH Albania Montenegro Serbia BiH Macedonia GDP/capita EUR 8,443 EUR 2,879 EUR 2,088 EUR 2,488 EUR 3,438 EUR 3,447 EUR 2,879 Source: EUROSTAT Table 2.4: Gross Domes c Product by en ty Item 2004 2005 2006 2007 2008 2009 GDP FBiH, million KM 10,350 10,945 12,261 13,879 15,647 15,231 GDP RS, million KM 5,116 5,763 6,544 7,351 8,489 8,233 GDP BD, million KM 480 449 467 548 581 550 FBiH share of total GDP 64.9% 63.8% 63.6% 63.7% 63.3% 63.5% RS share of total GDP 32.1% 33.6% 34.0% 33.8% 34.3% 34.3% BD share of total GDP 3.0% 2.6% 2.4% 2.5% 2.4% 2.3% Source: BiH Agency for Sta s cs

17 2.4 Agricultural indicators rela vely limited and the informa on made available is o en considered to be of a A key constraint to improvement of the rela vely poor quality, lacking sta s cal rigour agriculture sector management in BiH is the lack or relevance to the emerging market economy. of accurate, reliable and mely informa on. Despite substan al EU and interna onal donor With those caveats made, below is a summary assistance with ini a ves such as a pilot “Farm of the situa on in BiH agriculture based on Accountancy Data Network” (FADN) and a the sta s cs that are available. Pilot Agricultural Census, current informa on Agricultural land in Bosnia and Herzegovina collec on, colla on and dissemina on is s ll o en undertaken in a rather ad hoc manner. Bosnia and Herzegovina has a total area of Exis ng published sector informa on is 51,209 km2, of which lakes and rivers cover

Table 2.5: Agricultural areas in BiH, 2005–2009 Republika Srpska 2005 2006 2007 2008 2009 Av. 2005–2009 Arable land and gardens (‘000 ha) 593 596 596 587 584 591 Orchards and vineyards (‘000 ha) 50 50 49 48 51 49 Meadows (‘000 ha) 189 188 182 177 183 184 Total arable land (‘000 ha) 832 834 827 802 818 823 Pastures (‘000 ha) 166 166 164 148 168 162 Wetlands, reeds and fi shponds (‘000 ha) 34421 3 Total agricultural land (‘000 ha) 1,001 1004 995 952 988 988 Federa on of BiH 2005 2006 2007 2008 2009 Av. 2005–2009 Arable land and gardens (‘000 ha) 411 409 400 400 391 402 Orchards and vineyards (‘000 ha) 42 43 43 43 43 43 Meadows (‘000 ha) 262 263 257 264 254 260 Total arable land (‘000 ha) 719 719 703 712 692 709 Pastures (‘000 ha) 419 418 427 441 442 429 Wetlands, reeds and fi shponds (‘000 ha) 22222 2 Total agricultural land (‘000 ha) 1,140 1,139 1,132 1,155 1,137 1,141 Brčko District 2005 2006 2007 2008 2009 Av. 2005–2009 Arable land and gardens (‘000 ha) 30 29 29 29 30 29 Orchards and vineyards (‘000 ha) 33333 3 Meadows (‘000 ha) 11111 1 Total arable land (‘000 ha) 34 33 33 33 34 33 Pastures (‘000 ha) 11111 1 Wetlands, reeds and fi shponds (‘000 ha) 00000 0 Total agricultural land (‘000 ha) 35 34 34 34 35 34 Total BiH 2005 2006 2007 2008 2009 Av. 2005–2009 Arable land and gardens (‘000 ha) 1,034 1,034 1,025 1,016 1,005 1,023 Orchards and vineyards (‘000 ha) 95 96 95 84 97 93 Meadows (‘000 ha) 452 452 440 442 438 445 Total arable land (‘000 ha) 1,585 1,586 1,563 1,547 1,544 1,565 Pastures (‘000 ha) 586 585 592 590 611 593 Wetlands, reeds and fi shponds (‘000 ha) 5 6 6 4 3 5 Total agricultural land (‘000 ha) 2,176 2,177 2,161 2,141 2,160 2,163 Source: Agency for Sta s cs BiH, FBiH, RS and BD

18 12 km2 and land 51,197 km2.6 Of the total land livestock produc on is meadows (445,000 area, plains cover 5 percent, hills 24 percent, ha, 20.6 percent) and pastures (593,000 ha, mountains 42 percent and karsts 29 percent. 27.4 percent). Fruit orchards and vineyards Forests and woodlands cover about (3,500 ha) cover 98,000 hectares (4.5 percent 50 percent of BiH territory, and agricultural of total agricultural land). land totals 2.5 million ha or 0.7 ha per capita.7 Although both en es occupy roughly the same Land cover in BiH is heterogeneous. About area, Republika Srpska has a higher share of total 86 percent are automorphic soils, and the arable land (58 percent), and the Federa on remaining 14 percent hydromorphic soils. more of the total meadows (59 percent) and A large part of Bosnia and Herzegovina is pastures (72 percent). This is the result of the exposed to water erosion, par cularly its natural geography of each en ty, and as a central and southern part. consequence there is signifi cant produc on of crops in RS, whilst in the Federa on greater As with other data for BiH, data on agricultural importance is given to livestock. land are not always consistent. Depending on the source, this fi gure varies and diff ers 2.4.2.1. Agricultural land use considerably. According to offi cial sta s cs, agricultural land in BiH occupies 2.163 million Most of the agricultural land in BiH is used hectares, 42.2 percent of its territory. This for the produc on of grain (58 percent; fi gure is a fi ve-year average farm size in the 319,000 ha), where this produc on is more Republic of Srpska, the Federa on of BiH and signifi cant in RS (65 percent) than in FBiH Brčko District, according to data of the en ty (43 percent). One quarter (26 percent; and state agencies for sta s cs, which is 142,000 ha) of the area is under forage crops, shown in the Table 2.5: and 15 percent (82,000 ha) under vegetables. Areas under industrial crops are constantly BiH has 2.16 million hectares of agricultural being reduced, and by 2009 had fallen to land. In this structure a li le less than half is 7,000 ha in all of Bosnia and Herzegovina arable land and gardens (1.023 million hectares (1.7 percent of agricultural land). The detailed or 47.3 percent of total agricultural land). The structure of agricultural land use is shown in other half of the agricultural land used for the Table 2.6. Figure 2.1: Structure of agricultural land of BiH (average 2005–09)

6 A report of the Agriculture Sector in Bosnia and Herzegovina 2007, Ministry of Foreign Trade and Economic Rela ons. 2008. p. 6 7 Ac on Plan for Environmental Protec on BiH (Na onal Environmental Ac on Plan of Bosnia and Herzegovina), Ministry of Urbanism, Housing and Services, Civil Engineering and Ecology and the Federa on Ministry of Spa al Planning and Environment. 2003. p. 10

19 Table 2.6: Structure of use of agricultural land in Bosnia and Herzegovina, ‘000 ha

Republika Srpska 2005 2006 2007 2008 2009 Av. 2005–2009 Crops 227 225 226 225 216 224 Industrial crops 78854 6 Vegetables 38 37 37 37 34 37 Fodder crops 74 78 80 82 69 77 Total sown area 346 348 351 349 323 343 Nurseries, fl owers, ornamental plants 00000 0 Fallows and uncul vated arable land 247 248 244 238 261 248 Total arable land and gardens 593 596 595 587 584 591 % fallows and uncul vated arable land 41.7% 41.6% 41.0% 40.5% 44.7% 41.9% Federa on of BiH 2005 2006 2007 2008 2009 Av. 2005–2009 Crops 85 83 82 87 85 84 Industrial crops 22222 2 Vegetables 46 45 45 45 43 45 Fodder crops 64 67 64 64 62 64 Total sown area 197 197 193 198 192 195 Nurseries, fl owers, ornamental plants 22222 2 Fallows and uncul vated arable land 212 210 209 200 197 206 Total arable land and gardens 411 409 404 400 391 403 % fallows and uncul vated arable land 51.6% 51.3% 51.7% 50.0% 50.4% 51.0% Brčko District 2005 2006 2007 2008 2009 Av. 2005–2009 Crops 11 10 10 10 11 10 Industrial crops 11111 1 Vegetables 1 1111 1 Fodder crops 11111 1 Total sown area 14 13 13 13 14 13 Nurseries, fl owers, ornamental plants 00000 0 Fallows and uncul vated arable land 17 16 16 16 16 16 Total arable land and gardens 31 29 29 29 30 30 % fallows and uncul vated arable land 54.8% 55.2% 55.2% 55.2% 53.3% 54.7% Total BiH 2005 2006 2007 2008 2009 Av. 2005–2009 Crops 323 318 318 322 312 319 Industrial crops 10 11 11 8 7 9 Vegetables 85 83 83 83 78 82 Fodder crops 139 146 145 147 132 142 Total sown area 557 558 557 560 529 552 Nurseries, fl owers, ornamental plants 22222 2 Fallows and uncul vated arable land 476 474 469 454 474 469 Total arable land and gardens 1,035 1,034 1,028 1,016 1,005 1,024 % fallows and uncul vated arable land 46.0% 45.8% 45.6% 44.7% 47.2% 45.9% Source: Agency for Sta s cs BiH, FBiH, RS and BD

20 Close to half of the arable land in BiH is not restricted in their development due to their cul vated (450–480,000 hectares). There status as par ally priva zed en es, which are many contribu ng factors, including the limits their access to and use of modern presence of mines,8 the absence of economic management and investment capital; mo va on of producers to be involved in consequently many have leased parts of their agricultural produc on, the ageing of rural lands to smaller private farmers. Overall, the households, and the number of proper es need for consolida on of fragmented farm s ll remaining vacant a er the war. holdings into more viable economic units is recognized as one of the most pressing Household and farm structure agricultural policy issues in BiH today. During the period of the Socialist Federal The general problem of inadequate and Republic of Yugoslavia, the size of private uncoordinated data extends also to cadastral farms was limited to 10 ha on fl at and hilly and land ownership data, much of which land, whilst in mountain regions farmers have not been updated since the war and so were allowed to own up to about 30 ha. do not refl ect the current situa on. There is Moreover, private proper es and farms were as yet no comprehensive farm or sta s cal not much favoured by the government during register, so no offi cial data are available on that me, and full a en on was paid only to the numbers of landowners or agricultural state farms, which worked about 5 percent of 9 households. In the immediate post-war all agricultural land. period there was evidence that the number of In 2006, it was es mated that there were landowners was growing and the average size over 500,000 agricultural holdings in BiH. of holdings contrac ng, in marked contrast to More than 50 percent of these agricultural the pa erns shown in almost every country of holdings are es mated to be less than 2 ha, Europe;10 as the economy returns to a more and over 80 percent are less than 5 ha. These normal condi on, a progressive migra on to small farms are o en further divided into 7–9 the towns (shown consistently in Yugoslavia small parcels crea ng major problems for throughout its existence) may be expected to produc vity and overall effi ciency. Although resume. the size of land areas actually cul vated by Agricultural GDP individual farms may be larger, the extent of land fragmenta on restricts the adop on of The recent development of agricultural GDP more modern agricultural systems. is presented in the Table 2.7. Recent surveys indicate that subsistence and The share of agriculture in overall GDP has semi-subsistence farms, which consume the decreased steadily from 2004 to 2009, and is majority of their produc on and produce rela vely low compared with other coun es only li le marketable surplus, remain the in the region. In 2004, FBiH generated dominant form of farm structure in BiH. 43 percent of agricultural GDP, RS 49 percent However, in recent years, there is increasing and BD the remaining 8 percent. In 2009, evidence of more farmers producing for the FBiH generated 43.5 percent, RS 50.7 percent market. Most commercially oriented farms and BD 5.8 percent, represen ng a rela vely tend to be larger, though they are o en stable distribu on.

8 According to the BiH Mine Ac on Strategy (2009–2019), the Council of Ministers BiH, 2008, p. 6, BiH at the end of 2008, had suspected 1,573 km2 (mined) areas, which is slightly more than 3 percent of the territory. According to the Managing Director of the Bosnia and Herzegovina Mine Ac on Centre (BHMAC), the suspected area is today (June 2012) 1,544 km2 equal to 3.04 percent of the territory, see Atlan c Ini a ve Newsle er, June 2012. The capacity of demining is 35–40 km2 per year from 2012 to 2019, if fully opera onal. Recent data from the EUD indicate a suspected area of 1,442 km2 equal to 2.81 percent of the BiH territory. 9 Čustović, H. & Ljuša, M. Par cipatory Land Use Development in Bosnia and Herzegovina.p. 1. 10 Čustović, H. & Ljuša, M. Par cipatory Land Use Development in Bosnia and Herzegovina. p.3.

21 Table 2.7: Agricultural GDP, 2004–2009

Item 2004 2005 2006 2007 2008 2009 GDP of agriculture & 1,425 m KM 1,524 m KM 1,664 m KM 1,784 m KM 1,895 m KM 1,817 m KM related services of which: - FBiH 618 m KM 639 m KM 703 m KM 763 m KM 813 m KM 791 m KM - RS 698 m KM 768 m KM 859 m KM 918 m KM 978 m KM 921 m KM - DB 109 m KM 118 m KM 103 m KM 103 m KM 105 m KM 105 m KM Agriculture, share of 8.9 % 8.8 % 8.6 % 8.2 % 7.7 % 7.6 % total GDP GDP agriculture index, 107.6 107 109.2 107.2 106.2 95.9 previous year = 100 Source: Agency for Sta s cs BiH, Agency for Sta s cs RS (Sta s cal Yearbook 2010, Agency for Sta s cs FBiH, own research, exchange rate KM to EUR = 1.96 all years. Data for 2010 not available.

2.5 The Bosnia and Herzegovina and totals by species; given the tendency livestock sector in context for households to keep more than one species, it is diffi cult to es mate exactly how Share of GDP many households are involved in livestock produc on in some form. Total GDP of Bosnia and Herzegovina is reported as EUR 12.7 billion, of which However, preliminary data were available for agriculture accounts for EUR 930 million the Federa on of Bosnia and Herzegovina, (7.3 percent). indica ng that around 124,000 farms kept some combina on of ca le, sheep, goats, The farmgate value of meat, cows’ milk and pigs or poultry, with an average of 1.6 eggs is es mated in this report at some diff erent species on each farm. The share of EUR 900 million. In order to es mate the GDP FBiH livestock farms within the total for BiH of the livestock sector, it would be necessary to ranges from 20 percent for pigs to 53 percent subtract intermediate consump on, including: for ca le. Assuming that overall 40 percent . live animals imports for breeding and of livestock farms lie within the Federa on, fa ening (EUR 47 million in 2010); the total number of households in BiH with . imported animal feed and veterinary livestock may be es mated at around 310,000 medicines (not known); (there are also some Legal Units, but their . imported general inputs to livestock farms, number is insignifi cant when compared with including machinery and fuel (not known). private households). Also the value of feed cereals, oilseeds and The detailed analysis of Chapter 3shows that forages produced on non-livestock farms in these 310,000 households with livestock BiH and sold to livestock farmers should be include: a ributed to the GDP of the arable sector rather than to the livestock sector. . 161,000 with ca le . 63,000 with sheep Thus the share of livestock within overall . 127,000 with pigs agricultural GDP is not known precisely, but it clearly makes a very signifi cant contribu on. . 188,000 with poultry Number of households keeping livestock It was es mated in 2006 that there were over 500,000 agricultural holdings in BiH, so Most of the data provided to the study approximately 60 percent of all agricultural team were already aggregated into counts holdings keep some kind of livestock.

22 3. Farmers

This sec on presents a detailed qualita ve comparing and combining diff erent datasets, and quan ta ve descrip on of livestock and to developing a project livestock survey producers, according to the following to fi ll the most important gaps in current structure: knowledge. The overall methodology is summarized in this sec on, and the specifi c . Sec on 3.1 describes the methodology and approach taken to poultry is detailed in data sources employed, as the basis for the Annex 1. rest of this chapter. The study team would like to thank the en ty . Sec on 3.2 gives a short socio-economic overview of livestock farmers, based on the sta s cal offi ces, the Sta s cal Agency of results of the Project Farm Survey. Bosnia and Herzegovina, and the Agency for Animal Iden fi ca on for their kind . Sec on 3.3 discusses ca le farms and their coopera on, generous provision of data, and produc on of milk and beef meat. willingness to enter into open debate about . Sec on 3.4 covers the produc on of sheep the strengths and weaknesses of their own and sheep meat. datasets. . Sec on 3.5 covers pigs and pig meat. In summary, the es mates of livestock numbers made in this study are based on a . Sec on 3.6 covers poultry and the produc on of poultry meat and eggs. survey of some 15,000 private farms carried out by the sta s cal offi ces, plus direct . Sec on 3.7 deals briefl y with the produc on repor ng from all legal units, which compares of milk from sheep and goats. favourably with the methodology applied in . Sec on 3.8 presents es mates of Gross other countries. As an example, Serbia has Output from the primary livestock sector. been developing its agricultural sta s cs system with Eurostat support and its offi cial . Sec on 3.9 gives an overall summary es mates of livestock numbers are now of livestock produc on and processing based on an annual survey of 5,000 holdings, structure, and highlights some of the issues divided into ten strata, plus direct repor ng relevant to the policy and investment from all legal units. response. . Sec on 3.10 combines this chapter’s Readers not specifi cally concerned with the es mates of farm-level output with customs detailed methodology may wish to jump data on imports and exports to produce an straight to sec on 3.2. overall supply-u liza on balance for meat, and compares its es mates of per capita 3.1.1 Strengths and weaknesses of consump on with those for other countries each dataset in the region. Offi cial sta s cs provide es mates of the 3.1 Methodology and data sources total number of livestock of each species, employed and how many of these are breeding females (cows and heifers; sows and gilts; ewes; laying Almost every commentator refers to the hens) as compared to other (usually fa ening) diffi cul es of obtaining reliable sta s cs animals. These data are collected year a er in Bosnia and Herzegovina. It was clear year in a consistent way and so provide from the outset that this would be a major the best available indicator of trends in the challenge for this study, and so considerable sector. However, there are some recognized a en on has been given to assessing, limita ons in the sta s cal methodology

23 employed11 and these sta s cs do not give this source is less reliable as a standalone any es mate of the number of livestock farms es mate of livestock or farm numbers, but nor any picture of their structure, neither can provide reasonably robust es mates of by herd/fl ock size nor by orienta on of the share of livestock on each farm type. produc on (towards milk, meat or eggs, or towards breeding or fa ening). None of these sources records farm-level informa on on outputs or marke ng As part of the input to offi cial agricultural channels, so this informa on was collected sta s cs, each farm registered as a legal unit through a purpose-designed stra fi ed survey (e.g. company or coopera ve) is obliged to of 121 livestock farms, carried out specifi cally provide an annual report on livestock numbers for this study. This is quite a small sample, to its local sta s cal offi ce, so for legal units not suffi cient to give a reliable es mate of both the number of farms and the number of something that varies greatly from farm to livestock are known. Despite the obliga on farm (such as the number of livestock of each to report annually, it is understood that some type), but moderately reliable for es ma ng enterprises do not always provide data, so less variable numbers, such as output per these numbers will be a slight underes mate animal or price per kilogram. of the true posi on. The Master Sample of some 15,000 private In the case just of ca le, an addi onal data farms and agricultural households gives a source was available, in the form of the detailed picture of the size distribu on of Animal Iden fi ca on and Registra on (I&R) livestock holdings, but records only one database, established in 2006–7 in line with livestock defi ni on for each species (the EU legisla on. Like all such systems in the total number of animals for ca le, pigs and region, the database was probably at its most poultry, and the number of breeding females accurate immediately a er the ini al ear- for sheep). With a simple ques onnaire and a tagging campaigns in each en ty, which were large sample site, this source provides a small completed in 2006 in RS and BD, and in 2007 number of variables with a high degree of in FBiH. It will then have become progressively sta s cal accuracy. less reliable as a sta s cal data source due to delayed or under-repor ng of deaths, births The Pilot Agricultural Census covered 866 and movements. It was therefore agreed farms, 657 of which kept livestock, and with the Agency for Animal Iden fi ca on to collected full informa on from each of work with two extracts from the historical them using a ques onnaire based on the database, showing the situa on in RS and BD EU Farm Structure Survey, covering the at the end of 2006, and the situa on in FBiH at period October 2009 to September 2010. It the end of 2007; the implica ons of changes included the numbers and types of livestock in the ca le popula on since these dates is kept (by age, sex, weight, breed type and/or discussed in the relevant sec ons below. purpose, according to context), so allowing each livestock enterprise to be placed in an 3.1.2 Methodology to combine data agriculturally meaningful category such as sources “small dairy farm” or “pig fa ening”. With its medium sample size, small number of Data from these diff erent sources was sampling units, and detailed ques onnaire, combined as follows:

11 The number of animals of each kind on private farms and households is provided by “es mators” in each municipality, rather than by any structured survey or census methodology. The en ty and state-level sta s cal bodies are currently in the process of developing new methods of data collec on in line with interna onal and Eurostat standards, with support from the EU and na onal donors. As a result of this work, Bosnia should soon be in possession of much more reliable and comprehensive sta s cal data which may be used in place of the various es mates that had to be made in this study.

24 Pilot Agricultural Census • En ty; . Each livestock enterprise (ca le, sheep, • Agro-ecological zone (Lowland; Hilly; pigs, poultry) on each of the 866 farms of Hilly-Mountainous; Mountainous; the Pilot Agricultural Census was classifi ed Mediterranean; Mediterranean- in two ways: Mountainous); • By herd/fl ock size group (1, 2, 3–5, 6–10, • Al tude: etc.) for either total animals or (in the » Lowland = Lowland + Hilly + Mediterranean case of sheep) for the number of breeding » Upland = Hilly-Mountainous + Mountainous females; + Mediterranean-Mountainous • By enterprise type, combining data on size, breed and the rela ve share Legal Units (LUs) of diff erent categories of livestock; a . The Master Sample covered only private diff erent approach was developed for farms and agricultural households, not each kind of livestock, as described in the legal units (companies, coopera ves, etc.), following sec ons. so data on legal units from the FBiH and RS . For each species and herd/fl ock size group, Sta s cal Offi ces were added to the Master the following ra os were calculated: Sample es mates as an addi onal special • Percentage of farms falling into each farm size group. type; . No data on legal units were available for Brčko • Percentage of total animals falling into District, so for each species the number of each farm type; animals on legal units in Brčko District was es mated from the ra o of animals on legal • Ra o of breeding females to total animals for each farm type. units to animals on private holdings for the rest of Bosnia and Herzegovina. This is not Master Sample (MS) a par cularly reliable es mator, but the propor on of total livestock represented . Tables were provided by the Sta s cal by legal units in Brčko District is so small Agency for each livestock species, by en ty (0.07 percent of all ca le, 0.00 percent and municipality, showing: of all sheep, 0.10 percent of all pigs, and • The number of farms in each herd/fl ock 0.51 percent of all poultry) that its eff ect on size group (using the same groups as for overall numbers is negligible. In the absence the Pilot Agricultural Census); of any informa on on the number of legal • The number of livestock (total or breeding units in Brčko District, these small numbers females) in each herd/fl ock size group. of es mated livestock were all considered . The numbers of farms and livestock to lie on one token farm. recorded by the Master Sample for each Combining data from the Master Sample, municipality were divided by the response- Legal Units, and the Pilot Agricultural adjusted sampling frac on achieved in each Census en ty (6.88 percent in FBiH, 6.86 percent in RS, 18.02 percent in BD) in order to generate . The Master Sample and Legal Units data unbiased popula on es mates. were used, as described above, to es mate . The Sta s cal Agency advised that the the total number of livestock of each Master Sample data were not reliable at species and the number of farms keeping the level of individual municipali es, so each species, by municipality and by herd/ municipality-level es mates were only used fl ock size group. as building blocks to combine into larger . The number of breeding females of each units with greater sta s cal accuracy. The species, by municipality and herd/fl ock following aggregate es mates were made: size group, was calculated from the ra o of

25 breeding females to total livestock found in Ca le Iden fi ca on and Registra on the Pilot Agricultural Census.12 Database . Within each species, municipality and size . Each farm in the animal iden fi ca on group, the total number of farms, animals database was classifi ed by herd size group and breeding females was allocated (trea ng any female over 24 months old between farm types in propor on to the as a cow) and by agro-ecological zone, and share found in the Pilot Agricultural Census then analysed to give: for that species and size group. • The herd size distribu on; . The individual es mates were then summed up to produce na onal es mates of the • The breakdown of ca le by breed, split numbers of farms, animals and breeding by en ty and by agro-ecological zone. females for each farm type. . These data are presented in sec on 3.3.3 as addi onal informa on about ca le Project Farm Survey produc on. . Each farm in the Project Farm Survey was Cross-check with other sources classifi ed as a type of ca le, sheep, pig and poultry, using iden cal farm-type defi ni ons . The fi nal results of all these calcula ons as for the Pilot Agricultural Census. were then cross-checked with various sta s cs, reports and stakeholders in order . The following averages were calculated for each farm type in the Project Farm Survey: to confi rm their overall plausibility. The results of these cross-checks are presented • The quan ty and value of milk, eggs in the following sec ons. and meat produced, and livestock slaughtered, per head of breeding or Note on en ty-level results fa ening livestock; . The Master Sample is large enough to • The quan ty and value of meat, milk and give reliable es mates of farm and animal eggs used or sold through each marke ng numbers at en ty level, which are included channel (home consump on, direct sale, in Annex 7; sale to dairy, etc. as relevant to the kind of output). . The Pilot Agricultural Census included only two municipali es in each main en ty, together . The na onal es mates of animal numbers with all of Brčko District. This is insuffi cient for each farm type were mul plied by these to detect reliably diff erences in the shares of es mates of output quan ty and value per farm types between the en es, so its results head to generate total output by farm type. have been applied na onally; . This total output was then allocated . The Project Farm Survey was conducted in between the diff erent marke ng channels both en es. When analysing all farms in in propor on to the split found in the the sample together (as in the analysis of Project Farm Survey for each farm type. farm households in sec on 3.2) it is just The Project Farm Survey also collected data about possible to diff eren ate between on farm family structure, income sources the en es, but when the farms are and plans, which is analysed in sec on 3.2, further roken down by type, the numbers and on farm infrastructure and investment in each cell become too small for further needs, which is presented in Chapter 9 on subdivision by en ty. Therefore es mates Iden fi ca on of poten al and needs of the of output and marke ng are given at the sector. na onal level only.

12 In the case of sheep, where the Master Sample recorded ewes, the reverse approach was employed, es ma ng total sheep from the number of breeding females.

26 3.1.3 Comparison of results from Sheep diff erent data sources . Offi cial sta s cs es mated a popula on The following graph compares the es mates of 1,046,000 sheep and 747,000 breeding of livestock numbers from diff erent sources:13 ewes on 31 December 2010. Ca le . MS+LU data give signifi cantly higher values of 1,515,000 sheep and 1,059,000 breeding . Offi cial sta s cs for 2010 show a total of ewes. In part these es mates may refl ect 461,000 ca le. seasonal varia ons, as the Master Sample . The combined es mate from the Master survey was carried out around the end of Sample and Legal Units data gives a June 2009, before the autumn culling of signifi cantly lower fi gure of 380,000 for old ewes, but this cannot account for the 2009–10. en re diff erence of over 300,000 breeding . The I&R system, when fi rst completed in each ewes. A possible explana on might be en ty, recorded a total of 467,000 ca le in underes ma on of small sheep producers 2006–07; sta s cs suggest that the overall in the offi cial sta s cs; data presented in number of ca le has fallen by around sec on 3.4.2 suggest that small fl ocks of up 9 percent since then, so this fi gure would to 20 ewes account for some 370,000 ewes. be equivalent to 426,000 ca le in 2010. . One stakeholder claimed that the total . Probably the offi cial sta s cs provide a sheep popula on was only half a million, slight overes mate and the MS+LU data a but no evidence was presented to support slight overes mate, though the reasons for this fi gure, which is far lower than either of these biases are not clear in either case. these two largely independent data sources. . To conclude, Bosnia and Herzegovina has . A further means of verifi ca on became around 400,000 ca le, almost certainly in available at a late stage in this project, in the range of 380–460,000; greater precision the form of provisional results from the than this is not currently possible. ear-tagging of sheep within the Federa on

Graph 3.1: Comparison of diﬀ erent data sources

Source: MS = Master Sample; LU = Legal Unit; I&R = Iden ﬁ ca on & Registra on (ca le database)

13 MS = Master Sample; LU = Legal Unit; I&R = Iden ﬁ ca on & Registra on (ca le database)

27 Table 3.1: Data resul ng from the ear-tagging of sheep within FBiH

Source Date Farms Sheep Ewes Notes Project es mate Summer 2009 19,568 598,224 423,143 “Sheep” es mate includes lambs November “Farms” es mate includes holdings I&R provisional data 16,761 513,217 n/a 2011 with pigs or goats but no sheep December BiH Sta s cal Agency N/A 519,289 406,026 2010

as part of extending the EU-compliant slaughtered. Thus the peak pig popula on will Iden fi ca on and Registra on (I&R) be higher than either of these two es mates. system to pigs and small ruminants. Data . Overall, the BiH pig popula on may for this en ty as at the end of November be es mated at around 600,000 with 2011 are shown in the Table 3.1, together pronounced seasonal fl uctua ons. with other es mates for FBiH. Given that the ear-tagging campaign is Poultry not yet completed, and excludes young . Offi cial sta s cs give a fi gure of 21.6 million lambs (both by design and by ming), the poultry of all types: 3.8 million layers and provisional number of 513,000 sheep in 17.8 million broilers and other poultry. FBiH seems fully consistent with the project es mate of 598,000 sheep and 423,000 . MS+LU data suggest just over half this ewes during the summer months. number: 12.1 million. It should be noted that the project es mate . The discrepancy between these two (derived from the Master Sample plus the es mates is too great to ignore, so the very small number of legal units opera ng ques on of poultry numbers was inves gated in the sheep sector) suggests there might in depth (as reported in Annex 1: Analysis be some 3,000 more sheep farms yet to of poultry numbers). The data problems be covered, possibly containing many of appear to stem from a number of diff erent the smallest backyard fl ocks (sec on 3.4.2 causes including: below es mates that there are nearly • The high degree of concentra on in 23,000 households with up to 5 ewes or poultry produc on, which can lead to fa ening sheep, and it is quite possible that high sampling errors; some of these were overlooked in the ini al • The pronounced seasonality of poultry ear-tagging campaign). produc on by households and smaller . Overall, the BiH sheep popula on, excluding private farms; newborn lambs, may be es mated at around • The mul -cycle nature of broiler 1.5 million, with seasonal fl uctua ons. produc on, leading to the existence of Pigs three diff erent possible measures for poultry numbers: installed capacity; . Offi cial sta s cs recorded 588,000 pigs on number present on a given day; number 31 December 2010. produced in one year. . MS+LU data give a very similar fi gure of . The analysis of Annex 1 resulted in an 584,000, made up of the mid-summer MS es mated number of layers very close to data and the mid-winter LU data. the fi gure quoted in offi cial sta s cs, but an . The pig popula on is understood to rise es mate of broilers that is some 10 million markedly during the autumn, when many lower than offi cial sta s cs; the diff erence is households and small farms keep a few believed to result from confusion between fa ening pigs, and then to fall sharply at annual throughput and the number of the beginning of winter when most are broilers present on a given day.

28 Graph 3.2: Age distribu on of surveyed farmers

Source: Project Farm Survey . The analysis arrived at the following best In the Bosnian Federa on, farmers were most es mates of poultry numbers: commonly in their 40s, and the large majority • Number of u lized poultry places = were aged between 30 and 60, with just 13.3 million: 10 percent older than 60. » 5.1 million layers In Republika Srpska the farmers were slightly » 8.2 million broilers older, most commonly in their 50s, with • Number of poultry slaughtered per year around 22 percent being over 60. (in and outside of slaughterhouses) = 35.4 million: None of the responding farmers was in their » 3.3 million layers 30s but this does not mean that there are » 32.1 million broilers no young people in agriculture – just that • Number of poultry on 31 December = their parents s ll take lead responsibility for 7.7 million, rising to 12.4 million in summer: running the farm. » 3.9 – 4.9 million layers The ques on “Is there a successor to take over » 3.8 – 7.5 million broilers the farm?” elicited the following responses . However, each of these numbers may (Graph 3.3). be subject to considerable error and it is hoped that a future Agricultural Census will It seems that farmers fall into two groups: bring more clarity to this ques on. For now, older farmers who have already got a the analysis in this report uses the ﬁ gures successor, and younger farmers who have presented here in bold. not yet produced a successor. There was no 3.2 Overview of livestock farmers sugges on that the next genera on would choose to adopt diﬀ erent careers and leave The Project Farm Survey included a ques onnaire the farm. sheet about the farming family, the results of which are presented in this sec on. Whilst this appears to guarantee long-term sustainability and thus provide a good basis 3.2.1 Age and succession for investment, in terms of farm structure The Graph 3.2 shows the age structure of the it indicates a serious problem. One of the main farmer in each household: over-riding weaknesses of BiH farming is

29 Graph 3.3: ‘Is there a successor to take over the farm?’

Source: Project Farm Survey that farms are very small and fragmented The land constraint is greatest for ruminant (see the SWOT analysis of sec on 9.2); as livestock, where the key to proﬁ table the country’s land area is ﬁ xed, the only way produc on is good forage produc on, but that the average size of farms can increase even for the rela vely landless enterprises is for the number of farms to decrease. of pigs and poultry, as some farms get bigger, Thus if the next genera on of farmers is others will inevitably leave the sector and to be more professional and run larger, labour produc vity will increase as the more compe ve farms, this means that agricultural workforce declines. the majority of exis ng farmers’ sons and daughters will need to leave agriculture 3.2.2 Farm household income and sell or lease the family’s land to other The various sources of overall household farmers so that these can expand. income are shown in the following graph:

Graph3.4: Income sources of surveyed farms: Share of total household income.

Source: Project Farm Survey

30 The propor on of household income coming Somewhat surprisingly, the category “Help from non-agricultural sources was signifi cantly from family” (e.g. remi ances from rela ves higher in Republika Srspka (34 percent) than working abroad) was a very rare and minor in the Federa on (15 percent), and crop source of income. products also played a slightly more important role in RS, providing 11 percent of income as 3.3 Ca le compared to 6 percent in FBiH. This sec on looks in detail at ca le producers, Livestock, meat, milk and dairy products were and comprises: the main source of income in both en es, . An overview of the sector’s development in together providing 80 percent of income in recent years, based on offi cial sta s cs; FBiH and 55 percent in RS – but this is only . A breakdown of ca le producers into to be expected in a survey that specifi cally diff erent kinds of dairy, beef and mixed targeted livestock producers. farms, based on analysis of the Pilot Rather more informa ve is the following Agricultural Census and Master Sample; graph, which shows the breakdown of . An analysis of the ca le breed structure, nonagricultural income on these selected based on data from the Animal Iden fi ca on livestock farms: System; The diff erences between the two en es . Es mates of the quan es and values are rela vely small, and the results may be of milk produced by each farm type and summarized as follows: marketed through diff erent channels, based on a combina on of the na onal es mates . Full- me employment provides 40– and results of the Project Farm Survey; 50 percent of total non-agricultural income . Similar es mates for meat output. . Part- me employment provides around 10 percent 3.3.1 Sta s cal overview . Pensions provide around 20 percent Overall ca le numbers for the last six years . Other sources provide 20–30 percent are shown in the Graph 3.6:

Graph 3.5: Non-agricultural income of surveyed farms: Share of total nonagricultural income

Source: Project Farm Survey

31 Graph 3.6: Ca le numbers by en ty

Source: BiH Agency for Sta s cs

The main features to note are: 3.3.2 Typology of ca le farms . A rise in ca le numbers up to 2006 driven, as in neighbouring countries, by the rising This analysis looks at the 400 farms from the world milk price; 2010 Pilot Agricultural Census which kept ca le. . A rela vely constant split of animals between en es, which in 2010 stood at: Ca le farms can be broken down in various • Brčko District: 1.5 percent ways: • Federa on of Bosnia and Herzegovina: . Herd size; 47.6 percent . Type of produc on: dairy, beef fa ening or • Republika Srpska: 50.9 percent beef suckler; The following graph shows that cows and heifers . Orienta on of produc on: home use, in calf total around 340,000 and make up about informal marke ng or formal sale to three-quarters of the total number of ca le: slaughterhouses and dairies.

Graph 3.7: Ca le numbers by type

Source: BiH Agency for Sta s cs

32 The Pilot Agricultural Census, like the Master Basic ca le farm types Sample, contains full informa on on herd size but nothing on orienta on of produc on. It Based on the above, ca le farms in the Pilot also contains a number of variables which Agricultural Census were broken down into help to indicate the type of produc on: the following main groups: . The type of the cows, whether of dairy . Dairy herds: With at least 40 percent of LSU breed or beef breed (though the widespread as cows, predominantly of dairy breeds; use in Bosnia and Herzegovina of dual- . Beef breeding herds: With at least purpose breeds means that cow breed is 40 percent of LSU as cows, predominantly not an en rely reliable indicator of the main of beef breeds; purpose of produc on); . Beef breeding herds: With ca le but no . The rela ve mix of ca le of diff erent age cows; and sex groups, indica ng the extent of . Dairy-beef herds: Farms that do not fall into beef produc on. any of the above categories, having some Note on typical herd mix cows but less than 40 percent of total LSU as cows. The rela vely high number of other A calcula on of the typical mix of ca le kinds of stock indicates that the farmer is classes in a dairy herd which rears its own buying and rearing beef ca le in addi on to replacements to calving at 24 months of age, his dairy enterprise. and fa ens male and surplus female calves to slaughter at 18 months of age, shows that Dairy herds 50–60 percent of the total LSU would be Dairy herds account for just over 80 percent represented by cows. (81.3 percent) of all ca le holdings. The If surplus animals are slaughtered younger average composi on of this category is as (as on many small farms, for household follows: consump on), or reared to around 150 kg and Cows (almost all dairy) 2.4 then sold to beef fa ening farms (as is rela vely common in Bosnia and Herzegovina), then Other ca le 1.6 the propor on of livestock units (LSU) as cows Total ca le LSU 3.3 could rise to 70 percent. If a farm were to follow the usual interna onal prac ce of intensive Given the large number of farms of this type, dairy farms and sell all surplus calves within a it can usefully be broken down further into few days of birth, then cows could account for size classes: up to 80 percent of total LSU, but this prac ce is not yet widespread in Bosnia and Herzegovina. This shows that 55 percent of all “dairy herds” (by this typology) have just 1 cow, However, if slaughter stock were taken to and 95 percent have 1–5 cows. Herds with higher weights and the average age at fi rst more than 20 cows (those which might be calving rose to 30 months, then cows might considered as full- me commercial dairy account for only 45 percent of total LSU. farms) are par cularly uncommon. Of the 400 family holdings with ca le covered by Thus most dairy farms will have 45–70 percent the pilot Agricultural Census, none had more of their livestock units as cows, and so any than 50 cows; presumably almost all of the farm with less than 40 percent of LSU as cows larger dairy farms in BiH are registered as is almost certainly buying calves, either to legal units. rear as replacements or, more commonly, to fa en up for beef, eff ec vely cons tu ng a Ideally, dairy herds would also be classifi ed second enterprise of “beef fa ening” being according to their use of milk: whether for run alongside the dairy enterprise. home use, on-farm processing and informal

33 Table 3.2: Size classes of dairy farms Average Average Average Number of Share of dairy number of number of Herd type/size ca le LSU per farms farms ca le per cows per holding holding holding Dairy herds 325 100.0% 3.3 4.0 2.4 Group 1: 1 cow 178 54.8% 1.2 1.4 1.0 Group 2: 2 cows 60 18.5% 2.6 3.1 2.0 Group 3: 3–5 cows 69 21.2% 5.3 6.8 3.6 Group 4: 6–10 cows 10 3.1% 11.4 13.2 8.0 Group 5: 11–20 cows 6 1.8% 22.2 27.8 14.7 Group 6: 21–50 cows 2 0.6% 39.8 49.0 26.5 sale, or delivery to dairies.14 However, the Pilot By defi ni on, these farms have no cows. Agricultural Census did not collect marke ng These fa ening herds fell into two dis nct data so this cannot be used to categorize size groups: farms; instead the results of the Project Farm . Small herds of up to 10 ca le, with an Survey are used to examine how the diff erent average of 3.3 (91 percent of beef fa ening dairy farm types used and sold their milk. herds); Beef breeding herds . Larger herds with over 20 ca le, with an average of 61 (9 percent of beef fa ening Only 3 percent of ca le herds fall into this herds). category of a classic “suckler herd”:15 The Pilot Agricultural Census did not fi nd Cows (mainly beef) 2.1 any medium-sized beef fa ening herds (1021 cows), sugges ng that beef rearing Other ca le 1.9 is either a part- me sideline or a serious Total ca le LSU 2.1 commercial opera on.

Most of these farms are small, with 1 or 2 Dairy-beef herds breeding cows. A few farms had 3–8 cows, This category of herds accounts for 6 percent but the narrow size range did not jus fy of all holdings with ca le, and has the further subdivision by herd size. following average composi on: Beef fa ening herds Cows (almost all dairy) 1.9 10 percent of all ca le herds fall into this Other ca le 8.7 category, which has the following average composi on: Total ca le LSU 8.0

Cows - Typically they have 1–2 cows, presumably to Other ca le 7.7 supply the household with milk and perhaps also to provide milk for feeding calves. A few Total ca le LSU 3.7 farms in the sample had slightly larger dairy

14 For the Dairy Sector Study in Serbia, sta s cal data on milk usage were available, which allowed iden fi ca on of a dis nct farm type of “home dairy”: a dairy farm that is focussed on home processing of milk for sale direct to local customers and through green markets. This type of farm certainly exists in Bosnia as well, but is more diffi cult to quan fy. 15 Classifi ca on of ca le farms in the Project Farm Survey were aided by a specifi c survey ques on as to whether the breeding cows were a suckler herd.

34 herds (3–8 cows), indica ng that they were Final typology of ca le farms and es mated running both enterprises on a commercial numbers basis, but the size range was not large enough Based on the above analysis, eight types of to jus fy subdivision by herd size. ca le farm were deﬁ ned, to which has been added one more type “corporate dairy farm” Whilst the Pilot Agricultural Census does not to describe farms with more than 100 cows, provide a wide enough sample for detailed most of which are registered as legal en es. analysis of the diﬀ erences between en es, it was no ceable that the combina on The es mated numbers and shares of of cows and fa ening ca le (both “beef farms, ca le and cows, for all of Bosnia breeding” and these “dairy-beef” herds) was and Herzegovina, a er combining together considerably more common in RS than in the data from the Pilot Agricultural Census, Federa on, perhaps partly encouraged by a Master Sample, and sta s cs on Legal Units, recent subsidy for suckler cow produc on in are shown in the following graph (en ty-level RS. es mates are given in Annex 7).

Table 3.3: Final typology of ca le farms and es mated numbers

Group Name Descrip on Number and share of: Farms with Marke ng Total ca le Breeding cows ca le 1 Dairy, 1 milking cow 102,000 133,000 102,000 house cow Home consump on, on-farm 63% (av. 1.3) (av. 1.0 cow) processing and local sale 35% 46% 2 Dairy, small 2–5 milking cows 35,000 129,000 86,000 dairy farm Some to dairies, some home use 22% (av. 3.7) (av. 2.5 cows) and informal sale 34% 39% 3 Dairy, 6–20 milking cows 1,300 21,000 12,000 medium Mainly supplying milk to dairies 0.8% (av. 16) (av. 9.5 cows) dairy farm 5.5% 5.5% 4 Dairy, large 21–100 milking cows 70 4,000 2,100 dairy farm (usually private) 0.04% (av. 54) (av. 29 cows) Supplying milk to dairies 1.0% 0.9% 5 Dairy, > 100 milking cows 30 8,000 5,500 corporate (usually legal unit) 0.02% (av. 290) (av. 204 cows) dairy farm Supplying milk to dairies 2.1% 2.5% 6 Dairy-beef Dairy cows and purchased beef 4,700 35,000 6,900 farm ca le 2.9% (av. 7.5) (av. 1.5 cows) Various forms of marke ng 9.2% 3.1% 7 Beef Beef cows 5,500 10,000 7,700 breeding Milk mainly for home use; 3.4% (av. 1.9) (av. 1.4 cows) beef mainly for formal sale 2.7% 3.5% 8 Beef 1–10 beef ca le 12,000 27,000 - fa ening, Mainly supplying 7.6% (av. 2.2) - small slaughterhouses 7.2% 9 Beef > 20 beef ca le 130 13,000 - fa ening, Mainly supplying 0.08% (av. 102) - large slaughterhouses 3.4% TOTAL 161,000 381,000 223,000 (av. 2.4) (av. 1.4 cows)

35 Graph 3.8: Ca le farms

Source: Project es mates from mul ple sources

These es mates are also presented Graph 3.8. . The very low average herd size: Several features stand out from this analysis: • Average of 1.5 cows and 0.6 other ca le on dairy farms; . The high importance of the single-cow herd or “house cow”, which accounts for • Average of 2.8 ca le per beef (breeding 63 percent of all ca le farms and 46 percent or fa ening) farm; of all cows; • Overall average of 2.4 ca le. . The importance of the 2–5 cow “small Import of ca le for further rearing and dairy farm”, with 22 percent of farms and produc on 39 percent of cows; . The rela vely low importance of farms One feature not evident from this farm- with more than 20 cows (the 21–100 level analysis is the role played by imported cow “large family farm” and the over-100 animals. Customs data for 2010 show an cow “corporate dairy farm”). These farm import of 3,300 tonnes of ca le “not for types, which might be regarded as serious breeding or slaughter”, i.e. for further commercial farms, together account for just fa ening. This represents approximately 0.06 percent of ca le farms and 3.4 percent 32,000 animals, of which around half are of cows; calves (see sec on 6.3.1 for a fuller analysis of interna onal trade). Assuming that the . The existence of quite a number of farms that combine milk produc on with beef 223,000 cows shown in the above table each fa ening of purchased ca le. These hybrid have one calf per year, this import increases farms, described here as “dairy-beef farms”, the number of calves available for rearing by account for 3 percent of farms and 9 percent around 14 percent. of ca le; The carcass equivalent of this import will be . The skewed distribu on of beef fa ening around 1,650 tonnes, or 4 percent of the total farms, where 99 percent of such farms are beef output from BiH farms as es mated in very small, averaging just 2.2 ca le, but sec on3.3.5 below, thus indica ng that most the 1 percent of larger farms (with over of the weight is put on these animals whilst 20 ca le) rear one third of the beef ca le; being reared in Bosnia and Herzegovina.

36 Graph 3.9: Number of cows by breed and en ty

Source: BiH Agency for Animal Iden ﬁ ca on, 2006–7

3.3.3 Ca le breed and herd structure cows. The “other breeds”, found especially in the Federa on, are mainly of dairy types, Detailed data on ca le breeds and herds are par cularly alpine dairy breeds. Holstein- provided by the na onal Animal Iden fi ca on Friesian cows and crosses are found on some and Registra on (I&R) system, established in farms, but account for only 8.5 percent of the 2006–2007. total. Local breeds, such as the Buša, make up Cow breeds by en ty some 14 percent of the total cow herd, rising The Graph 3.9 shows the breed structure of to almost 18 percent in the Federa on. cows by en ty. Cow breeds by agro-ecological zone The dominant breeds are Simmental and Simmental crosses, especially in RS, which Diff erent breeds are suited to diff erent overall account for almost two-thirds of all condi ons, and the following graph shows

Graph 3.10: Cows by breed and agro-ecological zone

Source: BiH Agency for Animal Iden ﬁ ca on, 2006–7

37 Table 3.4: Herd size in cows or total ca le Herd size Average Average Herd size can be measured either in cows or Zone cows in ca le in in total ca le, and values for each across the herd herd diff erent zones are given in the Table 3.4: Flat 1.9 4.0 Hilly 1.6 2.4 This shows that very small herds dominate across all zones, though with an expectable tendency Mediterranean 1.5 3.2 for herds to be slightly larger on fl at land. LOWLAND 1.7 2.9 Hilly-Mountainous 1.6 2.3 3.3.4 Milk produc on and marke ng Mediterranean-Mountain 1.6 2.0 The following graph shows the es mates of Mountainous 1.5 2.2 the amount of milk produced by each farm UPLAND 1.5 2.2 type and used in several diff erent ways: OVERALL 1.6 2.6 The diff erent uses for milk, as measured through the Project Farm Survey, are: the distribu on obtained by classifying each . Feed and losses: Milk not used for human municipality into one of six “agro-ecological consump on, the large majority of which zones”: goes for animal feed. This graph includes only milk that was milked from the cow Simmentals are clearly the dominant breed and then fed back to livestock and does in fl at areas, whilst local breeds and “other not include the unmeasurable quan ty of breeds” account for almost half of cows milk suckled by calves; this can be quite in mountainous areas. Rather surprisingly, signifi cant on small- and medium-sized there are signifi cant numbers of Friesian- farms, where it is common prac ce to Holstein ca le in mountainous municipali es, let male calves suckle for several months presumably in the valleys. before either slaughtering them or selling This graph also shows that over 80 percent them to beef fa ening farms. Only a few of all cows are found in three zones: Hilly, of the largest farms use calf milk replacer, Mountainous and the intermediate “Hilly- so almost all replacement heifer calves are Mountainous” zone. reared on milk.

Graph 3.11: Milk output by farm type and marke ng channel

Source: Project es mates from mul ple sources

38 . Household use: Fresh milk consumed by the . The overall balance of milk produc on across farming family; on average, each surveyed the diff erent farm types largely follows the farm provided milk, dairy products (see distribu on of cows, as presented in sec on next bullet), meat and livestock products to 3.3.2, with some increase in the importance 5.7 family members, which might include of the larger dairy farm types, due to their rela ves living nearby or visi ng regularly, higher milk yields per cow. as well as the main farming household. . Feed use accounts for around 9 percent . Home processed: Milk that was processed of total milk on most dairy farms, though on the holding into cheese, kajmak, etc. 44 percent of milk output on beef breeding The end use of these products can include farms, as would be expected. Only on the household use, direct sale and sale through largest “corporate dairy farms”, with their green markets (see sec on 4.3). use of milk replacer, does this fall to under . Direct sale: Fresh milk sold direct to 4 percent. consumers, usually to neighbours or to . Household use is very important, especially regular local customers. on the smallest “house cow” farms, where it . Middlemen: Milk sold to middlemen with accounts for 30 percent of total produc on. their own transport, almost always for Overall, 16 percent of milk is consumed onward delivery to dairies. directly by the farming family. . Dairies: Milk sold to dairies, either by . Home processing is the most important collec on from the farm or by delivery to a of all uses for milk, overall accoun ng for milk collec on centre. 33 percent of total produc on, though this varies from 49 percent of milk from “house The total quan ty of milk produced is cows” to none at all of the milk produced by es mated at 907 million litres, of which “corporate dairy farms”. 822 million litres is for human consump on, . 277 million litres of this sold direct to dairies. Direct sale is only a factor for the smallest These values are somewhat higher than farms (1–5 cows), where it accounts for just offi cial data, which show a total of 734 million under 9 percent of produc on. However, litres in 2009 and deliveries to dairies of because these small farms make up such a 223 million litres. This discrepancy probably large share of total milk produc on, overall results from a number of factors, including: 7 percent of na onal milk output is sold direct to consumers. . Overes ma on of milk yields in the Project . Farm Survey (see below); Sales direct to dairies account for 30 percent of milk output, and adding in sales to middlemen . Underes ma on by sta s cal reporters of takes this up to 34 percent, almost iden cal to milk produc on and informal and feed use the share processed on farms. The importance by smaller farms (which would support the of direct and indirect sales to dairies varies claim by some commentators that yields considerably with farm size, from no sales by per cow are higher in reality than indicated 1–cow farms, to 55 percent of total output by sta s cs). from 25 cows “small dairy farms”, rising to Thus the actual amounts of milk produced 97 percent for “corporate dairy farms” with in Bosnia and Herzegovina probably lie more than 100 cows. somewhere between these two sets of The Graph 3.12 looks at these data from values. There is li le reason to assume that a diff erent perspec ve, showing the milk received by dairies would be under- contribu on of each farm type to the total reported, since it usually qualifi es for subsidy, supply of milk for human consump on, and so the total supply to dairies is probably close to the amount delivered to dairies. to the offi cial fi gure of 223 million litres. Several comments may be made about these This graph makes clear just how important are data: the 1–cow “house cow” farms as contributors

39 Graph 3.12: Share of total and formal milk supply by farm type

Source: Project es mates from mul ple sources to the na onal food supply, providing Weigh ng up these yields in propor on to 44 percent of all milk for human consump on, the na onal share of each farm type gives even though not directly supplying to dairies. an overall average milk yield of 4,080 litres/ “Small dairy farms” with 2–5 cows provide cow, of which 3,680 litres are for human 60 percent of the total supply to dairies and consump on. This is signifi cantly higher than so are clearly of very great importance to the the offi cial fi gure: total milk yield is 63 percent processing industry. higher and milk for human consump on is 47 percent higher. Overall, farms of up to 20 cows, which many commentators would consider as too small Possible reasons for these diff erences include: to be commercially viable, provide around 95 . Sample bias caused by the interviewers17 percent of all milk for human consump on tending to choose farms that they already and 86 percent of the direct and indirect knew, which would generally be be er than supply to dairies.16 average. Similar surveys in other countries of the region have found this same kind of Yield per cow bias. Many people have commented on the low . Over-repor ng by the farmers, either to average milk yield in Bosnia and Herzegovina, impress the interviewers or because they quoted in offi cial sta s cs as 2,500 litres delude themselves about how well they in 2010. The Graph 3.13 shows the yields are doing. In the almost total absence of reported by the Project Farm Survey for each any wri en farm records, this is hard to farm type. check and cons tutes a problem for regular

16 These calcula ons exclude the category of “dairy-beef farms”, which vary considerably in size. The conclusions are very similar to those given by Dušan Loza in his report on “Milk in Bosnia and Herzegovina, period 2000– 2010: Characteris cs, constraints and trends of development”, where his own survey of dairies found that 84 percent of their milk supply came from herds of 1–5 cows. 17 Fieldwork in FBiH was carried out by assistants from the Faculty of Agriculture and Food Science, University of Sarajevo, and in RS by advisors from the Agricultural Extension Service.

40 Graph 3.13: Yield per cow by farm type

Source: Project es mates from mul ple sources

sta s cs as well as for ad hoc surveys such In conclusion, it seems that the greatest as this. errors surround the smaller farm types and . A strong possibility that oﬃ cial es mators informal uses of milk, which were probably tended to underes mate or discount milk overes mated by the Project Farm Survey produced and then fed to livestock or used and underes mated by oﬃ cial sta s cs. informally on the farm. The es mated Value of milk output amount of milk delivered to dairies, excluding “house cow” holdings, gives an The following graph shows the es mated average of just 2,300 litres per cow, which is market value of milk used for human the kind of value that dairies quote. consump on:

Graph 3.14: Value of liquid milk for human consump on, by farm type and marke ng channel

Source: Project es mates from mul ple sources

41 Three important points to note are: 3.3.5 Beef produc on and marke ng . Price of milk used for human consump on: The Graph 3.15 shows the es mated output The preferred methodology was to value of beef meat, by farm type and marke ng such milk at its “opportunity cost”, i.e. at the channel. price which the farmer would have got for it if sold through the most likely alterna ve Total annual beef produc on is es mated at route (to dairies, middlemen or direct, as 40,000 tonnes. appropriate to the farm), but in many cases . The “house cow” type is the most important respondents placed their own value on this provider of meat, as it is of milk, due to the milk, probably refl ec ng how much it would huge number of farms involved. have cost them to buy it. . However, the various kinds of beef fa ening . On-farm processing: No value has farms now start to play a more important been assigned to milk used for on-farm role, with half of all meat coming from the processing, as the resultant products are small but numerous “small beef fa ening valued separately in sec on 3.8. farm”, the slightly larger but s ll rela vely . Feed use: No value has been given to feed common mixed “dairy-beef farm”, and the use. This is a signifi cant benefi t to the large but uncommon “large beef fa ening farmer, but ul mately contributes to the farm”, together with a further 5 percent value of meat output, which is es mated from “beef breeding farms”. The higher and reported in sec on 3.8. meat output of these farm types is due to The total value of liquid milk is es mated at two factors: 348 million KM (EUR 178 million). • The higher throughput of slaughter The importance of milk as a source of farm animals, typically taking a young bull from family income is shown by the Table 3.5. purchase to slaughter in just 10 months; • The much higher slaughter weight, with The value of milk produced by even a single most of the output consis ng of bulls of “house cow” makes a signifi cant contribu on around 630 kg, compared to the 130 kg to household income (earned or saved) and for calves o en slaughtered on dairy farms. the 2–5 cow “small dairy farm” it gives a cash income equivalent to a few months’ salary – In terms of slaughtering and marke ng: though obviously a signifi cant propor on of . Home slaughter is mostly found on the this will be spent on feed for the cows. smaller farms, where surplus calves The use and marke ng of home processed are reared for a few months and then dairy products is addressed in Chapter 4. slaughtered for home consump on, with

Table 3.5: Importance of milk as a source of farm family income Average annual milk value Farm type Including household use Sales only (cash income) Dairy, house cow 1,345 KM 359 KM Dairy, small dairy farm 4,234 KM 3,658 KM Dairy, medium dairy farm 17,262 KM 16,814 KM Dairy, large dairy farm 69,693 KM 69,160 KM Dairy, corporate dairy farm 653,378 KM 653,185 KM Dairy-beef farm 3,428 KM 3,379 KM Beef breeding 181 KM 148 KM All farm types 2,336 KM 1,515 KM

42 Graph 3.15: Beef output by farm type and marke ng channel

Source: Project es mates from mul ple sources

a dead weight of around 65 kg.18 Home marke ng channel (with home-killed meat slaughter accounted for 20 percent of total assigned a typical market value): meat output from farms with 1–5 ca le, but only 10 percent of overall ca le slaughter Total annual beef output value is es mated – a rela vely low propor on compared to at 340 million KM (EUR 173 million), with sheep and pigs. Total produc on of home- the distribution between farm types largely killed beef is es mated at 4,000 tonnes. following the pattern of beef output. . Sale of ca le for informal slaughter is also 3.4 Sheep reasonably commonplace, accoun ng for another 10 percent of total meat output This sec on looks in detail at sheep producers, (4,000 tonnes). Again, most of these animals and comprises: are calves. . An overview of the sector’s development in . Sale to a registered slaughterhouse accounts recent years, based on offi cial sta s cs; for 80 percent of overall meat output . A breakdown of sheep producers into (32,000 tonnes), though only 51 percent of diff erent kinds of breeding and fa ening animals slaughtered, refl ec ng the fact that farms, based on analysis of the Pilot it is mainly large beef ca le and cull cows Agricultural Census and Master Sample; that are sent to slaughterhouses.19 . Es mates of the quan es and values of sheep meat produced by each farm type and Value of beef output marketed through diff erent channels, based The Graph 3.16 shows the es mated value on a combina on of the na onal es mates of beef produced by each farm type, by and results of the Project Farm Survey.

18 The Project Farm Survey also showed a high propor on of home slaughter on “large dairy farms”, but this was infl uenced by one farm which claimed to slaughter all of its fi nished stock, including cull cows and beef ca le. 19 It should be noted that this es mate is for meat produc on from ca le reared on BiH farms and sent to domes c slaughterhouses; there is also a signifi cant produc on of beef from live ca le imported for slaughter, which is addressed in sec on 3.10 below.

43 Graph 3.16: Beef value by farm type and marke ng channel

Source: Project es mates from mul ple sources

3.4.1 Sta s cal overview . Republika Srpska: 47.2 percent Overall sheep numbers for the last six years This distribu on in part refl ects dietary are shown in the Graph 3.17. habits, but is more infl uenced by geographic Overall numbers grew no ceably from 2005 condi ons and the propor on of hilly and to 2007 and have since been stable, with mountainous land, which is less suitable for some periods of decline due to outbreaks of other forms of agriculture; thus the rela vely brucellosis and Q fever. The current split of fl at Brčko District has very few sheep. sheep numbers between en es is as follows: The rela ve share of breeding ewes in the . Brčko District: 0.4 percent total sheep popula on varies considerably . Federa on of Bosnia and Herzegovina: throughout the produc on cycle, though 52.5 percent most of the varia on is in the number of Graph 3.17: Sheep numbers by en ty

Source: BiH Agency for Sta s cs

44 Graph 3.18: Sheep numbers by type

Source: BiH Agency for Sta s cs lambs and other sheep, rather than ewes. possible to undertake much more detailed These year-end data give a popula on of just analysis. under 800,000 breeding ewes, three-quarters Half of the fl ocks were small, with just 1–5 of the number of total sheep: lambs (appropriate for consump on by the extended farm household), increasing to a 3.4.2 Typology of sheep farms maximum size of 90 lambs. These larger fl ocks This analysis looks at the 139 farms in the are probably kept by people who have some Pilot Agricultural Census that kept sheep. grazing land suitable for sheep, but either the land is too far from the house and/or they do The main ways in which sheep farms can be not want the extra work involved in caring for classifi ed are: ewes and managing the lambing process. . By size; Thus these two groups are: . By breeding/fa ening (most sheep fl ocks consist of breeding ewes and rear their . 1–5 lambs, no ewes: 4 percent of fl ocks, lambs up to slaughter weight, but some 0.3 percent of sheep producers may buy lambs for fa ening); . > 5 lambs, no ewes: 4 percent of fl ocks, 4 . By breed and rela ve emphases on meat percent of sheep versus milk. N.B. As the Master Sample recorded breeding ewes rather than total sheep, this category of Sheep fa ening fl ocks “sheep fa ening” farms would not appear at This category consists of sheep fl ocks all in the Master Sample data, yet the Pilot without ewes, generally represen ng farms Agricultural Census showed that such farms that buy young lambs to fi nish for meat. do exist. An es mate of the number of “sheep This category contains 7 percent of all sheep fa ening” fl ocks has been made, based on fl ocks and 4 percent of all sheep, but in this the ra o of such farms to “sheep breeding” sample that means only 10 fl ocks, so it is not farms in the Pilot Agricultural Census.20

20 The category of “household sheep fa ening” (1–5 lambs, no ewes) was allocated across the size groups for “household sheep breeding” (1–5 ewes), and the category of “commercial sheep fa ening” (> 5 lambs, no ewes) was allocated across the size groups for “commercial sheep breeding, small” (6–20 ewes) and “commercial sheep breeding, medium” (21–100) ewes. The largest category, “commercial sheep breeding, large” (> 100 ewes) was not taken into account as the Pilot Agricultural Census (PAC) did not fi nd any sheep fa ening fl ocks with more than 90 sheep. This slightly arbitrary alloca on seemed the best solu on available in the absence of any large-scale data source on the size distribu on of non-ewe sheep fl ocks.

45 Sheep breeding fl ocks census, but that may refl ect the ming of the census in rela on to the lambing me of This category comprises fl ocks with ewes, these fl ocks. and accounts for 93 percent of sheep farms and 96 percent of sheep. Shee p milking These fl ocks can be divided into four size It was hoped to use data from the Pilot groups: Agricultural Census to iden fy in what propor on of fl ocks the sheep were milked. . 1–5 ewes: 49 percent of farms and 7 percent All ewes in the survey were classifi ed as of sheep either “dairy breeds” or “other breeds”, which . 6–20 ewes: 9 percent of farms and should give an indica on of sheep dairying: 17 percent of sheep 61 percent of breeding fl ocks reported having . 21–100 ewes: 31 percent of farms and “dairy ewes” and these together made up 15 percent of sheep 72 percent of all ewes in the sample. However, discussion with stakeholders indicated that . More than 100 ewes: 4 percent of farms and 57 percent of sheep sheep milking is a minority ac vity, carried out by perhaps 10 percent or less of all sheep Most of these fl ocks had lambs as well as ewes, producers, so it appears that in many cases sugges ng that they were breedingfa ening sheep of recognized dairy breeds were being fl ocks. A few had no lambs at the me of the kept mainly for meat produc on.

Table 3.6: Es mated numbers and shares of farms, sheep and ewes for all of Bosnia and Herzegovina

Group Name Descrip on Number and share of: Farms with Marke ng Total sheep Breeding ewes sheep 1 Household 1–5 lambs; no ewes 1,600 3,300 - sheep Primarily for use by the extended (av. 2.1 sheep) fa ening family, though a small amount 2.5% 0.2% may be sold informally. 2 Commercial > 5 lambs; no ewes 3,200 87,000 - sheep Producing for informal and (av. 27 sheep) fa ening formal sale. 5% 6% 3 Household 1–5 ewes 21,000 91,000 69,000 sheep Primarily for use by the extended (av. 4.4 sheep) (av. 3.3 ewes) breeding family, though a small amount 33% 6% 7% may be sold informally. 4 Commercial 6–20 ewes 27,000 451,000 312,000 sheep Producing primarily for informal (av. 16 sheep) (av. 12 ewes) breeding, sale. 44% 30% 30% small 5 Commercial 21–100 ewes 8,800 513,000 386,000 sheep Producing primarily for informal (av. 58 sheep) (av. 44 ewes) breeding, and formal sale. 14% 34% 36% medium 6 Commercial > 100 ewes 1,000 370,000 283,000 sheep Producing primarily for informal (av. 374 sheep) (av. 287 ewes) breeding, and formal sale. 1.5% 24% 27% large 63,000 1,515,000 1,059,000 TOTAL 100% (av. 24 sheep) (av. 17 ewes)

46 Given this uncertainty, it did not seem useful farmers with a piece of grazing land for to try and iden fy a specifi c category of “dairy which they have no other use. sheep fl ocks”. . Rather more common is keeping a few Final typology of sheep farms and breeding sheep for household use, and the es mated numbers category of “Sheep breeding, household” (1–5 ewes) accounts for a third of all Based on the above analysis, the following sheep farms, though just 6 percent of six types of sheep farm were defi ned. The total sheep. es mated numbers and shares of farms, . Commercial breeding sheep are divided sheep and ewes for all of Bosnia and rela vely evenly between the three Herzegovina, a er combining together data fl ock size groups of “Small” (6–20 ewes), from the Pilot Agricultural Census, Master “Medium” (21–100 ewes) and “Large” Sample, and sta s cs on Legal Units, are (> 100 ewes), though most of the farms fall shown in the Table 3.5 (en ty level es mates into the smallest category. are given in Annex 7). . The largest of these categories, which might These es mates are also presented in the be regarded as a full- me sheep farm, Graph 3-19. represents only 1.5 percent of all sheep farms, but 24 percent of total sheep and Several observa ons can be made: 27 percent of breeding ewes. . The ac vity of “Household sheep fa ening”, where a family buys a few lambs to fa en 3.4.3 Marke ng of sheep meat up on some spare ground, is not at all The Graph 3.20 shows the es mated output of common (whereas the equivalent ac vity is sheep meat from each farm type by marke ng very common with pigs) – though all of the channel, based on the above sheep numbers fa ening-only sheep farms in the Project together with output per sheep as measured Farm Survey fell into this size range. by the project’s livestock farm survey. . Around 6 percent of all sheep are kept in somewhat large fa ening-only fl ocks The most no ceable features from this (averaging 27 sheep), presumably by analysis are:

Graph 3.19: Sheep farms

Source: Project es mates from mul ple sources

47 Graph 3.20: Source of sheep meat

Source: Project es mates from mul ple sources

. The high propor on of “Informal slaughter” . Sheep breeding, small: 5,000 tonnes by butchers and restaurants (half of total (25 percent) sheep meat output), which is the most . Sheep breeding, medium: 7,500 tonnes important market for commercial breeding (37 percent) fl ocks of all sizes. . Sheep breeding, large: 4,200 tonnes . The importance of home slaughter (nearly (21 percent) a third of total sheep meat), not just for household producers but also amongst The es mated split between the three small- and medium-sized commercial fl ocks; marke ng channels is as follows: . The rela vely small role played by registered . Home slaughter: 6,000 tonnes (30 percent) slaughter in slaughterhouses, accoun ng . Informal slaughter: 10,000 tonnes (50 for just a fi h of sheep meat produc on; percent) . The signifi cance of medium-sized breeding . Registered slaughterhouses: 4,000 tonnes fl ocks as the main suppliers of sheep to (20 percent) registered slaughterhouses.21 Value of sheep meat output Overall annual output is es mated at 20,000 tonnes, produced by the diff erent farm types The Graph 3.21 shows the es mated value as follows: of sheep meat produced by each farm type, . Sheep fa ening, household: 75 tonnes by marke ng channel (with home-killed meat (0.4 percent) assigned a typical market value): . Sheep fa ening, commercial: 2,000 tonnes Total annual sheep meat output value is (10 percent) es mated at 232 million KM (EUR 118 million), . Sheep breeding, household: 1,400 tonnes with the distribution between farm types (7 percent) largely following the pattern of meat output.

21 It might be expected that large commercial breeding ﬂ ocks would be even more oriented towards supplying slaughterhouses; the fact that this did not emerge in these es mates may reﬂ ect sampling error from the rela vely small project farm survey.

48 Graph 3.21: Sheep meat value by farm type and marke ng channel

Source: Project es mates from mul ple sources

3.5 Pigs . Es mates of the quan es and values of pig meat produced by each farm type and This sec on looks at pig producers in a similar marketed through diff erent channels, based way to the preceding analysis of sheep, and on a combina on of the na onal es mates comprises: and results of the Project Farm Survey. . An overview of the sector’s development in recent years, based on offi cial sta s cs; 3.5.1 Sta s cal overview . A breakdown of pig producers into diff erent Overall pig numbers for the last six years are kinds of breeding and fa ening farms, shown in the Graph 3.22. based on analysis of the Pilot Agricultural Pig produc on everywhere is subject to Census and Master Sample; pronounced mul -year cycles, par cularly

Graph 3.22: Pig numbers by en ty

Source: BiH Agency for Sta s cs

49 in countries such as Bosnia and Herzegovina • Fa ening piglets bought from breeders; where produc on is dominated by small- • Combined breeding and fa ening on the scale producers who can easily switch in or same farm. out of pig produc on in response to market . By weight of pigs produced: condi ons. The last cycle peaked in 2006, fell to its trough in 2008, and is currently rising • Light slaughter piglets, typically killed towards a new peak. with a live weight of around 30 kg to be roasted for family celebra ons or by Pig meat is predominantly consumed by the restaurants; Serbian and Croat popula ons, resul ng in the • Medium-weight porkers, typically going following split of pig numbers between en es: to slaughter with a live weight of 105– . Brčko District: 4.3 percent 110 kg for consump on as pork or use by . Federa on of Bosnia and Herzegovina: the pork meat industry; 14.9 percent • Heavy cu ers, typically slaughtered at a . Republika Srpska: 80.8 percent live weight of 150–200 kg and used for With one sow normally producing ten or processing into ham, bacon and other more piglets per li er, the majority of any pig cuts, or for tradi onal home-made popula on is made up of young and fa ening smoked products. pigs. The following graph indicates that the . By market orienta on: for home popula on of breeding sows fell from a high consump on, local sale, or formal markets. of almost 200,000 in 2005 to just 97,000 in Of the 866 farms with livestock in the 2010, making up some 17 percent of the total Pilot Agricultural Census (PAC), some 412 pig popula on (Graph 3.23). (48 percent) kept pigs; in Republika Srspka and Brčko District this propor on rose to 3.5.2 Typology of pig farms 74 percent. Analysing these 412 farms Pig farms can be classiﬁ ed in several diﬀ erent showed the following main groupings: ways: Pig fa ening herds . By size of farm; This category consists of pig herds without . By type of produc on: sows, i.e. people who buy weaners and rear • Breeding piglets for slaughter at light them up for meat. It contains 42 percent of all weights for sale to other farmers; pig herds and 12 percent of all pigs in the PAC.

Graph 3.23: Pig number by type

Source: BiH Agency for Sta s cs

50 Of these fa ening herds, 83 percent were very . 1 sow: 25 percent of farms and 8 percent of small, rearing just 1–3 pigs, which suggests pigs in this category. that they are producing for their extended . 2–5 sows: 60 percent of farms and family rather than for commercial sale. 56 percent of pigs in this category. Almost all pig fa eners had rather low . 6–20 sows: 15 percent of farms and numbers of pigs, o en equivalent to just one 36 percent of pigs in this category. li er, and of the 172 farms in this category, Most commonly, herds of this type have 2–5 only 2 were fa ening more than 20 pigs. sows, with an average of 3 sows and probably This suggests that the large fa ening herds selling around 50 piglets per year. The largest (which are known to exist) were either too breeding herd in the sample had just 15 sows. uncommon to have been found by this sample survey and/or are registered as legal Given the rela vely small size range of units rather than family holdings. these farms, for the purposes of analysis pig breeding herds have been broken down into For the purposes of analysis in this study, pig just two types: fa ening herds are broken into two types: . Commercial pig breeding (≥ 40 percent of . Household pig fa ening (1–3 pigs; no sows pig LSU as sows and gilts; ≥ 2 sows and gilts) or gilts) . Household pig breeding/fa ening (1 . Commercial pig fa ening (> 3 pigs; no sows sow; with or without rearing pigs) – this or gilts) “house sow” category spans both “pig Pig breeding herds breeding herds” and the next category of “pig breeding-fa ening” herds These herds have breeding sows but a rela vely small number of other pigs,22 Pig breeding-fa ening herds indica ng that they most probably sell some This category comprises self-contained pig or all of their piglets to the specialist “pig herds that keep breeding sows and rear their fa ening herds“ of the ﬁ rst group. progeny for meat. It contains 20 percent of all Overall, this category accounts for 38 percent pig herds but 41 percent of all pigs in the PAC. of pig farms and 48 percent of total pigs in the Almost all herds have around 8–9 fa ening PAC. The average pig numbers on these farms pigs per sow, indica ng that they fa en all of was as follows: the piglets that they produce and neither buy nor sell signiﬁ cant numbers of piglets. Sows 3.3 These herds can be divided into three main Piglets < 20 kg 10.8 size groups: Fa ening pigs > 20 kg 2.4 . 1 sow: 54 percent of farms and 19 percent This shows that most of the piglets are sold of pigs in this category. whilst s ll young, either for further rearing . 2–5 sows: 32 percent of farms and or for slaughter as piglets. In addi on, these 35 percent of pigs in this category. farms fa en a few pigs to heavier weights, . 6–20 sows: 15 percent of farms and presumably for home consump on. 47 percent of pigs in this category. These herds can be divided into three main The sample contained no breeder-fa ener size groups: herds with more than 20 sows.

22 The deﬁ ni on used for a “pig breeding herd“ was that at least 40 percent of the total pig livestock units were comprised of sows and gilts. The logic was that a typical breeding unit of one sow and her 11 piglets under 20 kg would have exactly 50 percent of its LSU represented by the sow and 50 percent by the piglets. In a larger breeding herd there would as well be some rearing gilts and at least one boar, but also some of the sows would be dry and without piglets, so the LSU balance would remain about the same. Any farm with less than 40 percent of its pig LSU as sows and gilts is assumed to be rearing as well as fa ening.

51 Again, the rela vely narrow size range of pig farms with large numbers of animals, and these herds suggested that analysis should some that have a diff erent main enterprise cover just two groups: and just keep a few pigs as a sideline or for . Commercial pig breeding-fa ening home consump on. (<40 percent of pig LSU as sows and gilts; No informa on was available on the breeding- ≥ 2 sows and gilts) fa ening split of these farms, so they have . Household pig breeding/fa ening (1 sow; been allocated to pig farm types in propor on with or without rearing pigs) – this “house to the split amongst the larger pig herds in sow” category spans both “pig breeding- the Master Sample. fa ening herds” and the previous category of “pig breeding” herds Final typology of pig farms and es mated numbers Note on Legal Units Based on the above analysis, the following fi ve The sta s cs on Legal Units, together with types of pig farm were defi ned. The es mated the es mate made for Brčko District, show a numbers and shares of farms, pigs and sows are total of just 24 Legal Units with pigs in Bosnia for all of Bosnia and Herzegovina, a er combining and Herzegovina, each with an average together data from the Pilot Agricultural Census, of 127 sows and 803 total pigs, or around Master Sample, and sta s cs on Legal Units, are 3.5 percent of the total pig popula on. These shown in the Table 3.7 (en ty-level es mates 24 farms may well include some specialized are given in Annex 7).

Table 3.7: Final typology of pig farms and es mated numbers

Group Name Descrip on Number and share of: Farms with Breeding Marke ng Total pigs pigs sows 1 Household 1–3 pigs; no sows or gilts 78,000 154,000 0 pig fa ening Primarily for use by the extended family, (av. 1.9 pigs) (no sows) though a small amount may be sold 61% 26% 0% informally. 2 Household 1 sow; piglets may be sold for 23,000 118,000 24,000 pig further rearing by others (“Breeding (av. 4.9 pigs) (av. 1.0 sow) breeding/ herd”) or fa ened on the holding 18% 20% 29% fa ening, (“Breeding-fa ening herd”), “House In prac ce almost all farms in this sow” group will market some pigs, as even a large extended family is unlikely to eat 1525 pigs per year. 3 Commercial > 3 pigs; no sows or gilts 8,000 50,000 0 pig fa ening Buying weaners and fa ening them for (av. 6.6 pigs) (no sows) sale on formal or informal markets. 6% 8% 0% 4 Commercial < 40 % of pig LSU as sows and gilts; 2,000 85,000 10,000 pig ≥ 2 sows and gilts (av. 44 pigs) (av. 5.5 sows) breeding- Rearing and fa ening pigs for sale on 2% 15% 13% fa ening formal or informal markets. 5 Commercial ≥ 40 % of pig LSU as sows and gilts; 16,000 178,000 48,000 pig ≥ 2 sows and gilts (av. 11.4 pigs) (av. 3.1 sows) breeding Rearing pigs, mainly for informal 13% 31% 58% sale to others in groups 1 and 3 for fa ening. 127,000 585,000 82,000 TOTAL (av. 4.6 pigs) (av. 0.7 sows)

52 Graph 3.24: Pig farms

Source: Project es mates from mul ple sources

These es mates are also illustrated in the . The rela vely small role played by specialist Graph 3.24. commercial pig fa ening units, with just Several features stand out from this analysis: 6 percent of all pig holdings and 8 percent of all pigs. This suggests that most of the . The very high importance of “backyard” piglets produced by specialist breeding pig keeping; almost 80,000 households are units are slaughtered young, rather than es mated to fa en a couple of pigs for their sold for further fa ening. own use, and some 23,000 households keep a breeding sow to generate piglets for sale to 3.5.3 Marke ng of pig meat their neighbours. Overall almost 80 percent of pig holdings and nearly half (46 percent) The Graph 3.25 shows the es mated output of all pigs fall into these categories; of pig meat from each farm type by marke ng

Graph 3.25: Pig meat output by farm type and marke ng channel

Source: Project es mates from mul ple sources

53 channel, based on the above pig numbers es mated at 361 million KM (EUR 184 million), together with output per pig as measured by with the distribution between farm types the project’s livestock farm survey. largely following the pattern of meat output. These es mates show the very high 3.6 Poultry importance of home slaughter and informal slaughter (by butchers, restaurants, etc.) for This sec on looks in detail at poultry the pig sector, with less than a third of all pig producers, and comprises: meat origina ng from registered slaughter in . An overview of the sector’s development in slaughterhouses. recent years, based on offi cial sta s cs; . A breakdown of poultry producers into Overall annual output is es mated at 88,000 diff erent kinds of layer and broiler farms, tonnes, of which 34,000 tonnes (39 percent) based on analysis of the Pilot Agricultural is generated by backyard producers. The Census and Master Sample; es mated split between the three marke ng channels is as follows: . Es mates of the quan es and values of poultry meat and eggs produced by each . Home slaughter: 23,000 tonnes (26 percent) farm type and marketed through diff erent . Informal slaughter: 37,000 tonnes (37 channels, based on a combina on of the percent) na onal es mates and results of the Project . Registered slaughterhouses: 28,000 tonnes Farm Survey. (32 percent) 3.6.1 Sta s cal overview Value of pig meat output Overall poultry numbers for the last six years The following graph shows the es mated are shown in the Graph 3.27. For the purposes value of pig meat produced by each farm of comparison, offi cial sta s cs have been type, by marke ng channel (with home-killed used for all six years, but the comments on meat assigned a typical market value): poultry numbers from sec on 3.1.3 should be Total annual pig-meat output value is borne in mind.

Graph 3.26: Pig meat value by farm type and marke ng channel

Source: Project es mates from mul ple sources

54 Graph 3.27: Poultry numbers by en ty

Source: BiH Agency for Sta s cs

These data show that poultry produc on has Brčko District, with its arable land resources, been the fastest growing of all the livestock is well suited to produc on of grain-fed pigs sectors in recent years, more than doubling and poultry, and pig meat is consumed by from 10.4 million in 2005 to 21.6 million in most of its popula on; thus its share in total 2010. The growth rates have varied somewhat pig and poultry produc on (4.3 percent and between en es: 3.7 percent respec vely) is around twice its . Republika Srpska has seen growth of share in human popula on (2.0 percent), 119 percent over this period, and now has whilst it has rather fewer ca le and very few 57.0 percent of all poultry in BiH; sheep in propor on to its size. . The Federa on of Bosnia and Herzegovina The following graph shows that the growth in saw almost as rapid growth, up by poultry numbers has been almost en rely in 103 percent and now accoun ng for 39.3 broilers (shown as “Other”) rather than layers percent of total poultry; (labelled as “breeding females”), so that . Brčko District grew less fast but s ll laying hens now account for just 18 percent increased by 43 percent, resul ng in 3.7 of the total poultry popula on: percent of total poultry numbers.

Graph 3.28: Poultry number by type

Source: BiH Agency for Sta s cs

55 3.6.2 Typology of poultry farms on legal units, and it its par cularly common for large broiler producers to be registered The main ways to classify poultry farms are as companies and produce on contract for by size and by type of produc on: broilers, poultry slaughterhouses. layers or both. They might also be classifi ed by market orienta on, but this tends to be Overall, small-scale poultry produc on focuses strongly correlated with size. mainly on laying hens, whilst most largescale commercial poultry farms keep broilers. Analysis of poultry farms from the Pilot Agricultural Census Types of poultry farm This analysis looks at the 542 sampled farms The survey collected data on: which kept poultry. Poultry are the most . Laying hens: 462 farms, 53 percent of all common of all domes c livestock species, farm households in the survey. being found on 64 percent of all livestock . Broiler hens: 98 farms, 11 percent of all holdings in the sample. farm households in the survey. Bimodal size distribu on of poultry farms . Separate data for geese, ducks, turkeys and “other poultry”: Overall 105 farms (12 percent One of the key characteris cs of poultry of the survey) reported some kind of poultry produc on in most countries is that it is that were not laying hens or broilers, which strongly bimodal, with many people keeping together accounted for 6 percent of total a few or a few dozen hens in the backyard, poultry. However, in most cases these were whilst a very small number of operators simply recorded as “other poultry” without keep thousands, tens or even hundreds any informa on as to their species. of thousands of birds and produce a high The following analysis therefore looks at just propor on of all marketed produc on. laying hens and broilers. The same was found in this survey, with just Laying hen fl ocks two farms that kept over 1,000 birds (two farms with 5,000 and 12,000 layers respec vely).23 The size distribu on of laying hen fl ocks is However, around half of all poultry are kept given in the table below:

Table 3.8: Size distribu on of laying hen ﬂ ocks Average number Share of laying Flock size group Number of farms Share of farms of laying hens hens Group 1: 1 2 0.4% 1 0.0% Group 2: 2 2 0.4% 2 0.0% Group 3: 3–5 54 11.6% 5 1.0% Group 4: 6–10 140 30.2% 9 5.0% Group 5: 11–20 158 34.1% 17 10.8% Group 6: 21–50 93 20.0% 33 12.1% Group 7: 51–100 13 2.8% 70 3.6% Group 12: 2001–5000 2 0.4% 8,600 67.6% GRAND TOTAL 464 100.0% 18 100.0%

23 This structural characteris c may have implica ons for the reliability of the Master Sample for this par cular number, since a diﬀ erent selec on of municipali es could easily have found a rather diﬀ erent share of large farms, perhaps with broilers instead of layers. It should therefore be recognized that the Master Sample es mates for large private poultry farms are poten ally subject to considerable error.

56 Most of these farms (65 percent) kept 6–20 just 3.5 broilers per farm household in the laying hens, and the average fl ock size country. This indicates that the na onal excluding the two large farms was 18 birds. poultry meat supply is more dependent on This would produce more eggs than a normal large commercial producers. household could consume, but might serve the extended family. Alterna vely, these Produc on of layers and broilers on the families might be producing some addi onal same farm eggs for sale to neighbours or to middlemen Whilst commercial poultry fl ocks tend to focus for sale at the green market. exclusively on layers or broilers, it is rela vely With 54 percent of all farms in the survey common to fi nd an agricultural household keeping an average of 18 laying hens, there that keeps both. There were 78 such farms are almost 10 laying hens for every farm in the in the Pilot Agricultural Census (14 percent country, indica ng that small-scale chicken of all farms with poultry), each keeping an keeping makes a signifi cant contribu on to average of 20 layers and 32 broilers. As these na onal egg produc on. are eff ec vely separate enterprises, normally using diff erent breeds of poultry, no a empt Broiler fl ocks has been made to iden fy a “layer-broiler” The size distribu on of broiler fl ocks is given farm type, and so a given farm may appear in the Table 3.9. twice in the analysis, once as a layer farm and again as a broiler farm (in exactly the same Here the dominant size group is 21–50 broilers, way as a farm may contribute to the es mates which would typically meet the needs of an for both ca le and sheep). extended family, perhaps rearing 50 chickens just once in the year, or around 20 chickens Note on Legal Units 23 mes per year. It is understood that such The sta s cs on Legal Units, together with the produc on takes place mainly in the summer, es mate made for Brčko District, suggest that when hea ng is not needed. there are around 42 Legal Units with poultry For health reasons, poultry meat is not in Bosnia and Herzegovina, es mated as: normally sold at green markets, so the main . 17 layer farms, each with an average of informal sale channel is direct to friends and 45,000 laying hens, giving a total of 750,000; neighbours. . 25 broiler farms, each with an average of Broilers are less common than laying hens, 210,000 broilers at any given me (and thus being found on only 12 percent of farms an annual throughput of over a million birds in the sample, giving an overall average of each), giving a total of 5.3 million.

Table 3.9: Size distribu on of broiler ﬂ ocks Average number Flock size group Number of farms Share of farms Share of broilers of broilers Group 2: 2 1 1.0% 2 0.1% Group: 3–5 1 1.0% 4 0.1% Group 4: 6–10 15 15.3% 10 4.8% Group 5: 11–20 28 28.6% 18 17.2% Group 6: 21–50 43 43.9% 35 50.6% Group 7: 51–100 9 9.2% 73 22.2% Group 8: 101–200 1 1.0% 150 5.1% GRAND TOTAL 98 100.0% 30 100.0%

57 Final typology of poultry farms and Table 3.10 (en ty-level es mates are given in es mated numbers Annex 7): These es mates are also illustrated in the Based on the above analysis, the following Graph 3.29. ﬁ ve types of poultry farm were deﬁ ned. The es mated numbers and shares of farms, layers The main points to note from this analysis are: and broilers for all of Bosnia and Herzegovina, . By far the most common kind of poultry a er combining together data from the Pilot enterprise is backyard laying hens, with Agricultural Census, Master Sample, and an average of 10 hens per household and sta s cs on Legal Units, are shown in the accoun ng for over a third of all laying hens.

Table 3.10: Es mated numbers and shares of farms, layers and broilers for all of Bosnia and Herzegovina Group Name Descrip on Layers Broilers Marke ng Farms with Total laying hens Farms with Total broilers laying hens broilers 1 Laying hens, 1–20 laying hens 167,000 1.7 million -- household Primarily for use by the (av. 10 hens) extended family, though a 89% 35% small amount may be sold informally. 2 Laying 21–500 laying hens 21,000 830,000 -- hens, small Eggs produced for sale (av. 39 hens) commercial directly and through green 11% 17% markets; cull hens may also be sold informally. 3 Laying > 500 laying hens 190 2.3 million -- hens, large Specialized farms with (av. 12,000 hens) commercial facility for egg produc on, 0.1% 48% buying day-old chicks or point-of-lay pullets of egg- laying breeds, and usually selling to regular buyers (shops, food industry, etc.). 4 Broiler hens, <= 1,000 broilers per cycle - - 29,000 574,000 small Households buy two- (av. 20 hens) (household/ day old chicks and 99% 9% small concentrated feed and commercial) grow them up to weight of 2+ kilos for household use and individual sale on the local market. 5 Broiler > 1,000 broilers per cycle - - 300 6.1 million hens, large Usually have one or more (av. 20,000 commercial buildings housing 2,000, 1% hens) 5,000, 12,000, 50,000 91% or 100,000 broilers. Buy chicks and concentrated feed, and either sell on contract to processors or have their own poultry slaughterhouse. TOTAL 188,000 5.5 million 29,000 6.6 million 100% (av. 26 hens) 100% (av. 227 hens)

58 Graph 3.29: Poultry farms

Source: Project es mates from mul ple sources

. Large-scale commercial egg produc on small number of very large commercial is rela vely uncommon but accounts for farms, averaging 20,000 birds per cycle and almost half of all laying hens (and more typically each producing around 100,000 than half of all egg produc on, due to broilers per year. higher produc on per hen, as shown in the next sec on). 3.6.3 Marke ng of poultry meat and eggs . Backyard and small-scale broiler produc on Poultry meat are less common, though s ll found on almost 30,000 farms, but over 90 percent The following graph shows the es mated of all broiler produc on takes place on a output of poultry meat from each farm type

Graph 3.30: Source of poultry meat

Source: Project es mates from mul ple sources

59 by marke ng channel, based on the above by marke ng channel (with home-killed meat poultry numbers together with output per assigned a typical market value). hen as measured by the project’s livestock Total annual poultry meat output value farm survey. is es mated at 198 million KM (EUR 101 Home slaughter and informal slaughter by million), with the large majority of value butchers are important for household laying coming from the “large commercial broiler hens and small-scale broiler produc on, but farms”, in line with their overwhelming share the overwhelming majority (over 90 percent) of meat quan ty. of the na onal poultry meat supply comes Eggs from commercially produced broiler hens slaughtered in registered processing plants. The following graph shows the es mated produc on and marke ng of eggs: Overall annual output is es mated at 63,000 tonnes, of which just 6,000 tonnes (9 percent) A er on-farm losses of 1.3 percent, it is generated by backyard producers. The is es mated that 1,292 million eggs are es mated split between the three marke ng produced each year: channels is as follows: . 353 million (27 percent) from household produc on; . Home slaughter: 1,400 tonnes (2 percent) . 241 million (19 percent) from small-scale . Informal slaughter: 6,600 tonnes (11 percent) commercial producers; . 698 million (54 percent) from large-scale . Registered slaughterhouses: 55,000 tonnes (87 percent) commercial producers. Egg produc on per hen varied with farm type: Value of poultry-meat output . Produc on on households varied The Graph 3.31 shows the es mated value considerably, from 90–300 eggs per hen per of poultry meat produced by each farm type, year, with an average of around 210;24

Graph 3.31: Poultry meat value by farm type and marke ng channel

Source: Project es mates from mul ple sources

24As with milk yields reported in sec on 3.3.4, these levels of household produc on seem rather high and may reﬂ ect over-op mis c repor ng by the householders and/or selec on of be er-than-average farms by the interviewers.

60 Graph 3.32: Egg produc on and marke ng

Source: Pr/oject es mates from mul ple sources

. Small-scale commercial producers achieved 3.7 Milk produc on by sheep and 200–320 eggs per hen, with an average of goats 290; This study focussed mainly on milk produc on . Most large-scale producers fell in the range by cows, which accounts for some 96 percent of 260–320 eggs per hen per year, with an of total milk output. However, this sec on average of 300. gives a brief review of milk produc on by As might be expected, household producers sheep and goats, which was the subject of consume most of the eggs themselves, some lively discussion during stakeholder though around a quarter are sold directly or workshops. at green markets, whilst the large majority of The keeping of goats was prohibited in former produc on from large-scale producers goes Yugoslavia, to prevent damage to forests, but to shops. The middle category of small-scale a er the poli cal changes and the end of this commercial producers uses all four marke ng prohibi on in each republic, quite a number channels, with just under 60 percent of their of goats suddenly appeared in the na onal output going to shops. sta s cs, and some commentators see goat This gives the following overall pa ern of egg produc on as a poten ally proﬁ table niche marke ng: that could be be er exploited than it is now. . Home use: 272 million eggs (21 percent); 3.7.1 Sta s cs on animals and milk . Direct sale: 118 million eggs (9 percent); produc on by species . Green markets: 89 million eggs (7 percent); The Graph 3.33 shows developments in the . Shops: 813 million eggs (63 percent). total numbers of cows, ewes and (total25) goats over the last six years.

25Sta s cs on she-goats are only available for a few of these years.

61 Graph 3.33: Livestock numbers by species

Source: BiH Sta s cal Agency

Sheep numbers have been generally sheep are milked. This was also reported by increasing, though dropping back in some the Master Sample but diﬀ ers considerably years, whilst cow and goat numbers show a from the opinion of local experts, who slight decline. es mate that only around 10 percent of sheep Oﬃ cial es mates of the numbers of milking are milked (see sec on on Sheep milking in cows, sheep and goats are shown in the 3.4.2 above). Graph 3.34. The total quan es of milk produced by each These data suggest that almost half of all species are shown in the Graph 3.35.

Graph 3.34: Number of milking females by species

Source: BiH Sta s cal Agency

62 Graph 3.35: Milk produc on by species

Source: BiH Sta s cal Agency

This graph makes clear the rela vely minor . Average annual milk yield: 345 litres/ewe contribu on of small ruminants to na onal (which is quite high for milking sheep). milk produc on, which formed the ra onale . Marke ng: 50 percent processed on farm, for this study’s focus on cow dairying. 50 percent sold to dairies. Key ﬁ gures for the three species in 2010 are . Milk price: 1.10 KM/litre sold to dairies summarized in the Table 3.11. (approximately twice the average price These numbers indicate that sheep produce received by cows’ milk producers) 2.5 percent of all milk, and goats just over Financial output from the sheep enterprise is 1 percent. summarized in the following table: 3.7.2 Milking sheep case study Total gross output value from this sheep enterprise was reported by the farmer as The Project Farm Survey included one ﬂ ock 246,000 KM, or just over 600 KM per ewe, of of milking sheep as a case study, summarized which three-quarters came from sheep’s milk here: and home-produced dairy products, and one . Flock size: 400 ewes (placing it in the largest quarter from livestock and meat. sheep farm type: “commercial sheep The share of output origina ng from milk is breeding, large”). quite high for sheep, with 50 percent or less

Table 3.11: Key ﬁ gures for the three species in 2010

Number of animals Milk produc on Total Milking Quan ty Share Cows 320,000 277,000 693 m litres 96.3% Ewes 747,000 311,000 18 m litres 2.5% Goats 63,000* 38,000 8 m litres 1.1% TOTAL 720 m litres 100.0% Source: BiH Sta s cal Agency * Includes all goats, not just breeding females.

63 Table 3.12: Financial output from the sheep enterprise Sheep Sold to another Sold for private Total output Share of total Output type Killed on farm farm slaughter value output Lambs 2,430 KM 17,010 KM 16,200 KM 35,640 KM 14% Gimmers 8,750 KM 0 KM 13,750 KM 22,500 KM 9% Cast ewes 1,250 KM 0 KM 5,000 KM 6,250 KM 3% Total meat and livestock value 64,390 KM 26% Milk and dairy products Processed on Total output Share of total Output type Used on farm farm and sold Sold to dairy value output to shops Milk 484 KM 77,000 KM 77,484 KM 31% Dairy products 980 KM 103,600 KM 104,580 KM 42% Total milk and dairy products value 182,064 KM 74% Total output from sheep enterprise 246,454 KM 100% Source: Project Farm Survey, one case study farm being more typical. The higher output value 3.7.3 Economic issues achieved by this farm can be a ributed to two main factors: The following box discusses the economic condi ons in which cows, sheep or goats may . The rela vely high milk yield per sheep; ﬁ nd their niche as milk producers: . The value added to sheep’s milk by on-farm processing before sale.

A conundrum: Cows, sheep or goats? Around the world, the vast majority of milk is produced by cows, yet countries have long-established tradi ons of producing cheese from the milk of sheep and goats. Why is this? When presented with a ready supply of goodquality feed, a high-yielding dairy cow is the much more effi cient machine for conver ng that feed into milk: . A dairy cow giving 6,000 litres per year will use about 50 percent of its “metabolizable energy” intake for producing milk, 5 percent for growth and producing a calf, and 45 percent for staying alive. . A sheep giving 60 litres of marketable milk per year and rearing one or two lambs will use just 5 percent of its energy for milk, 40 percent for meat (the lambs) and 55 percent for staying alive and walking around. . A goat fi ts somewhere between these two extremes. . Less labour is required to manage one cow than the 50 sheep that would produce the same amount of cheese, and where milk produc on is being undertaken to EU hygiene standards, the investment cost per litre of milk will also be substan ally lower for cows. However, where the forage supply is severely limited by drought or by a short growing season, sheep may survive or even thrive where cows would starve, and goats can exploit shrubs and coarse vegeta on that neither cows nor sheep will eat. For this reason, many mountainous and semi-arid countries have for centuries used sheep and goats to harvest sparse forage and convert it into meat and milk. Cheese produc on has been the preferred way of conver ng this milk into a form that can be easily stored and transported to market. Such tradi ons have developed a local taste for sheep and goats’ milk products, which now o en command a premium price. Therefore: . When there is a good supply of highquality feed and forage, and no big premium for sheep and goats’ milk products, cows are defi nitely the most effi cient way of conver ng that feed into milk.

64 . Where there is a lowquality forage resource that cows cannot use, sheep and goats present almost the only way to make money from it, with the best emphasis on meat versus milk being determined by the rela ve prices of these two products and the cost of labour. . Where highquality feed is available and there is a clear market premium for hygienic sheep and goats’ milk products, high-yielding goats are generally more eﬃ cient than sheep, both in terms of feed conversion and in per unit costs of labour and capital. This means that there is economic scope for three dis nct systems: . Intensively fed dairy ca le; . Intensively fed dairy goats; . Extensively grazed sheep and goats of local breeds.

Generally speaking, in Bosnia and Herzegovina na onal rather than EU regula on, and; milking sheep and goats tends to be kept . Development of large fl ocks of milking rather extensively with low investment in sheep and goats, with modern hygiene buildings and equipment for milking and milk standards and good yields, supplying storage, typically being milked by hand in the specialist dairies that are able to sell their pasture or stable. Whilst the milk and dairy products for a premium price. Such niche products remain des ned for informal sale development might well be supported direct to customers and via lightly regulated under the IPARD diversifi ca on measures, green markets, such an approach is viable. and is discussed further in the sector study However, within the EU the supply of sheep’s on diversifi ca on. and goats’ milk to registered dairies for processing and sale on the na onal market is 3.8 Es mated Gross Output subject to regula ons almost as ght as those Based on the above es mates, the farmgate applicable to cows’ milk, requiring substan al value of livestock produc on can be valued investment on the part of producers. Given at approximately 1.8 billion KM (about the much lower milk yield of small ruminants, EUR 900 million), broken down as follows: Table 3.13: Farmgate value of livestock produc on

Species Meat Milk/Eggs Total Ca le 340 m KM 502 m KM 842 m KM Sheep 232 m KM - 232 m KM Pigs 361 m KM - 361 m KM Poultry 198 m KM 151 m KM 349 m KM TOTAL 1,130 m KM 653 m KM 1,783 m KM only rela vely large ﬂ ocks are able to repay These es mates include produce consumed such investment, and probably need to on-farm and marketed informally, but do not command premium prices for their products yet include the value of: in order to do so. . The value added to home-produced meat Thus the milking sheep and goat sector and dairy products that are sold informally in Bosnia and Herzegovina has two main (these have been valued at the typical possible direc ons for development: selling price of the meat and milk used to produce them); . Small-scale milk produc on and on-farm processing to generate “small quan es . Milk and milk products from sheep and of product for direct sale to the ﬁ nal goats; consumer”, which will remain subject to . Wool.

65 The addi on of value to this meat and milk • Ca le = over 20 cows, i.e. “large dairy by the processing sector is discussed in the farm”, “corporate dairy farm”, “large beef following chapter. fa ening farm” + those “dairy-beef farms” with over 20 ca le. 3.9 Summary of livestock produc on • Sheep = over 100 ewes, i.e. “sheep and marke ng structures breeding, large”. The above analysis has divided farms into a • Pigs = over 20 sows/200 fa ening pigs number of diff erent types for each species, per cycle, i.e. those “pig breeding, refl ec ng their size and type of produc on. commercial”, “pig fa ening, commercial” More generally, BiH farms can be split into and “pig breeding-fa ening, commercial” three sectors: with over 200 pigs. . Household sector, producing mainly for • Poultry = over 500 laying hens/1,000 own consump on plus some informal sale broilers per cycle, i.e. “laying hens, • Ca le = “house cow” large commercial”, “broiler hens, large commercial”. • Sheep = “household sheep fa ening”; “household sheep breeding” . Small farm sector, consis ng of all other farms, i.e. those that produce mainly for • Pigs = “household pig fa ening”; “household pig breeding” sale, but are s ll below the size that would normally be regarded as an economically • Poultry = “laying hens, household” viable full- me farm in western Europe. In + those “broiler hens, household/ many countries these cons tute part- me small commercial” with up to 50 hens farms, but for many small farms in Bosnia . Commercial sector, consis ng of large and Herzegovina, farming is their principal farms producing predominantly for sale occupa on and main source of income (see to registered slaughterhouses and dairies. sec on 3.2.2 above). The thresholds used to defi ne this sector as those proposed in the dra IPARD measure The following graph shows the numbers of 101/1 as the minimal size for economic farms in each of these three sectors: viability a er investment:

Graph 3.36: Number of farms by sector

Source: Project es mates from mul ple sources

66 In terms of the number of farms, the enough to par cipate eff ec vely in IPARD is household sector represents the large extremely small. majority of producers of ca le (63 percent), However, the distribu on of animals between pigs (79 percent) and poultry (89 percent). the three sectors gives a rather diff erent Only in the case of sheep is the household picture, as shown in the Graph 3.37. sector pushed into second place (36 percent) by the small farm sector, which represents In this case for three of the four species it 63 percent of all sheep holdings. is the small farm sector that is dominant, accoun ng for 57 percent of all ca le, The commercial farm sector accounts for a 69 percent of sheep and 52 percent of pigs. very small number of farms for every species, with the following es mated numbers: The poultry sector shows a very diff erent distribu on, with 70 percent of all poultry . Ca le: 400 farms (0.25 percent) on commercial farms (especially large . Sheep: 1,000 farms (1.6 percent) broiler farms), followed by 20 percent on . Pigs: 25 farms (0.02 percent) households; the small farm sector is not so . Poultry: 600 farms (0.3 percent) signifi cant in terms of poultry produc on, with only 10 percent of all birds. It must be noted that the sampling error is The other species with a signifi cant commercial quite high for these rare farm types, so the farm sector is sheep, where 24 percent of all real numbers might be somewhat higher or sheep are in large fl ocks and only 6 percent in lower. The one case in which an independent small fl ocks for household use only. check can be made is ca le, where the Animal Iden fi ca on System recorded 519 herds with Chapter 9 of this report looks in detail at the more than 20 ca le in 2006/7; sugges ng strengths and weaknesses of farm type within that the sample-based es mate of 399 farms the household, small farm and commercial is around 20 percent too low. Even so, there is sectors, seeking to iden fy the opportuni es no doubt about the main conclusion: that the and threats that lie before them and to give propor on of farms that are similar in scale some indica ons of how the process of to their European counterparts and are large EU integra on will aff ect each kind of farm.

Graph 3.37: Number of animals by sector

Source: Project es mates from mul ple sources

67 Marke ng channels oriented towards formal marke ng channels, and the “Small farm sector” using all three The above analyses of each species also channels. However, each kind of output has looked at how much of the product is used its own speciﬁ c pa erns and the following or sold through each of three marke ng should be noted: channels: . The household sector provides a signiﬁ cant . Household: Use of milk, eggs, home-made share of total ca le to slaughterhouses, dairy products and home-killed meat by the mainly from cull cows and fa ened beef extended farm family. ca le that are too large to slaughter onfarm . Informal marke ng: Sale of milk and eggs and provide more meat than one family can directly to local consumers or through green easily store or consume. markets; sale of livestock for slaughter by . The small farm sector is the main source of butchers, restaurants and families. milk for registered dairies. . Formal marke ng: Sale of milk to dairies . The commercial farm sector sells more and livestock to registered slaughterhouses. of its sheep, and possibly also pigs, for There is some correla on between these informal slaughter than to registered three marke ng routes and the three farm slaughterhouses. sectors just discussed, with the “Household” The following graph summarizes the sector mainly supplying the household, the quan es of total output going through each “Commercial farm” sector being mostly of the three marke ng routes:26

Graph 3.38: Marke ng channels for milk, meat and eggs

Source: Project es mates from mul ple sources

26 Milk processed on farm has been allocated 30:70 between “household use” and “informal marke ng” in line with the split found in the Serbian Dairy Sector Study. Further analysis of the Bosnian survey data may allow a more precise split to be included in the ﬁ nal report.

68 This shows that formal marke ng is the slaughter sta s cs seriously underes mated dominant channel only for beef, poultry meat the actual quan ty processed in and eggs, whilst informal marke ng is most slaughterhouses, since these declared only important for sheep meat; all three marke ng a por on of their total throughput in order channels are of almost equal importance for to avoid taxa on and inspec on charges; it milk and pig meat. seems that a similar situa on may well occur in Bosnia and Herzegovina. Overall the split of output between the three marke ng channels may be summarized as: Conclusions

Milk Meat Eggs The structural picture is diff erent for each Household use 29% 18% 21% species and livestock product. In simplifi ed terms: Informal marke ng 33% 28% 16% . Ca le produc on is characterized by Formal marke ng 38% 54% 63% many small farms supplying formal Comparison with slaughter sta s cs slaughterhouses and dairies, plus a signifi cant amount of household As well as producing es mates of on-farm consump on and informal marke ng of and informal slaughter, the methodology milk and dairy products. employed here has also resulted in . Sheep produc on is characterized by a es mates of meat produc on by registered broad spread of small, medium and large slaughterhouses that are markedly higher farms producing mainly for household use than offi cial sta s cs, as shown in the and informal slaughter. following table: . Pig produc on is characterized by small Table 3.14: Es mates of meat produc on by and medium-sized farms producing for registered slaughterhouses household use and informal slaughter, with few large farms. Slaughter weight . Poultry produc on is characterized by two Offi cial Project Diff erence sta s cs es mates extremes: very many small farms producing Ca le 23,000 t 32,000 t + 38% for household use, and very few large farms producing for formal markets and Sheep 2,000 t 4,000 t + 98% accoun ng for the majority of output. Pigs 13,000 t 24,000 t + 80% Poultry 38,000 t 55,000 t + 47% Thus the policy and investment response must do three things: TOTAL 76,000 t 115,000 t + 51% . It must include strategies for the three Source: See legend kinds of farms in Bosnia and Herzegovina: The methodology employed by the BiH household sector, small farm sector, and Agency for Sta s cs is described in their commercial sector, since all three are “First release” bulle n as follows: important. Data on legal en es and parts of legal . It must include strategies for all three en es are submi ed based on bookkeeping, marke ng channels found in Bosnia and whereas for entrepreneurs aba oir data are Herzegovina: household use, informal given from approved municipal (veterinary marke ng and formal marke ng. inspec on) departments on the basis of . It must recognize the diff erences between available evidence. each species and each livestock product, and deliver responses appropriate to each. A senior member of the Veterinary Department in another former Yugoslav The current policy and investment responses republic told the consultant that offi cial are reviewed briefl y in Chapters 5 and 8.

69 A possible development path and specifi c are shown in the column headed “Mixed investment needs are discussed in Chapter 9, species”. Each meat product or item has its and recommenda ons for support through own technical conversion factor (weight of the IPARD programme are given in Chapter 11. product produced as a percentage of carcass weight used); this factor involves both 3.10 Supply-U liza on Balance for wastage (primarily the removal of bones) meat and the addi on of non-meat ingredients. Detailed informa on on this subject may The data presented in this chapter so far be found in the FAO publica on “Technical concern only the produc on of meat by farms Conversion Factors for Agricultural and households in BiH. Sec on 6.3.1 looks at Commodi es”;27 some of the more relevant interna onal trade in livestock products in factors quoted there include: value terms. The following table combines the es mates from this chapter with traded • Boneless meat: 71 percent (ca le), quan es of slaughter livestock, meat and 73 percent (pigs) meat products, in order to generate an overall • Sausages: 80 percent (ca le), 85 percent supplyu liza on balance and to es mate per (pigs) capita consump on for comparison with The most common items in interna onal other countries in the region. trade with BiH are boneless cuts of meat, and sausages; therefore both meat and The following points should be noted: meat products have been divided by an . Trade data are as supplied by Customs via overall conversion factor of 80 percent to MoFTER, for 2010. es mate the carcass weight equivalent of . The fi rst three lines of data are the project imports and exports. es mates of meat produc on from BiH . No data were available on opening and farms and households, as presented earlier closing stocks (which would apply mainly to in this chapter. preserved meat products), and it is assumed . The fourth line adds the import of ca le for that there is no major change in stocks from slaughter. Some 16,000 tonnes of slaughter- one year-end to the next. ca le imports are reported, and a killing- . Total meat supply is es mated at 276,000 out percentage of 50 percent has been used tonnes, of which: to es mate a contribu on of 7,800 tonnes • 77 percent was reared on BiH farms; to the domes c meat supply, assumed all to have been generated in registered • 3 percent was imported as live ca le for slaughterhouses. Customs data do not immediate slaughter; dis nguish whether interna onal trade in • 20percent was imported as meat and other species is for immediate slaughter, meat products. but total trade in adult non-breeding sheep, . The next block shows BiH’s recorded exports goats, pigs and poultry was small, and it is (including a small export of slaughter ca le understood that this is not a signifi cant to Lebanon). Overall, exports accounted for factor in the overall supply balance. 12,000 tonnes, or 5 percent of total meat . The next sec on of the table shows the supply. import of meat, meat products and off al. . Domes c consump on of meat and meat Most of the trade in meat products is for products is es mated by subtrac ng known items such as sausages, which are not exports from total supply, resul ng in an classifi ed by species and may o en contain overall consump on of 266,000 tonnes, meat from more than one species; these broken down as follows:

27 h p://www.fao.org/ﬁ leadmin/templates/ess/documents/methodology/tcf.pdf

70 • Beef: 66,000 tonnes (25 percent) capita consump on, and compares this with • Sheep meat: 20,000 tonnes (8 percent) the values for other ex-Yugoslav republics as quoted on the FAOSTAT website.28 The • Pig meat: 98,000 tonnes (37 percent) latest data there are for 2007, and no data • Poultry meat: 72,000 tonnes (27 percent) are yet available for Montenegro. Meat products of mixed or unknown • . The line “Average ex-Yugoslavia (excl. BiH species: 10,000 tonnes (4 percent) and Montenegro)” gives a popula on- . The ﬁ nal sec on of the table divides these weighted average per capita consump on, consump on es mates by the popula on of using the popula on numbers from the BiH (as quoted in sec on 2.1) to es mate per FAOSTAT commodity balance tables.

Table 3.15: Supply-U liza on Balance for meat Sheep Pig Poultry Mixed Total Beef meat meat meat species meat Home slaughter 4,000 t 5,900 t 28,500 t 1,500 t - 39,900 t Informal slaughter 4,000 t 10,100 t 36,700 t 6,600 t - 57,400 t Registered slaughterhouses: 0 t Reared in BiH 32,200 t 4,000 t 22,800 t 55,300 t - 114,300 t Imported for slaughter (× 50% killing-out (KO) 7,800 t - - - - 7,800 t Total domes c meat produc on 48,000 t 20,000 t 88,000 t 63,400 t 0 t 219,400 t Imports (carcass weight equivalent): Meat (÷ 80%) 13,300t 400t 7,000 t 15,100 t 0 t 35,800 t Meat products (÷ 80%) 500t 0 t 2,500 t 1,300 t 10,600 t 14,900 t Oﬀ al (100%) 4,900t 0 t 600 t 200 t 0 t 5,600 t Total imports of meat and meat products 18,700t 400 t 10,100 t 16,600 t 10,600 t 56,300 t TOTAL SUPPLY 66,700t 20,400 t 98,100 t 80,000 t 10,600 t 275,700 t Exports (carcass weight equivalent): Live animals for slaughter (× 50% KO) 600 t - - - Meat (÷ 80%) 40 t - - 4,700 t 3,900 t Meat products (÷ 80%) 500 t - - 3,500 t 6,100 t 8,200 t Total exports of meat and meat products 1,100 t 0 t 300 t 8,200 t 0 t 12,100 t Domes c consump on (by diﬀ erence) 65,600 t 20,400 t 97,700 t 71,800 t 10,600 t 266,100 t TOTAL UTILIZATION 66,700 t 20,400 t 98,100 t 80,000 t 10,600 t 275,800 t Per capita consump on calculated for BiH, with regional comparisons from FAOSTAT BiH calculated per capita consump on 17.1 kg 5.3 kg 25.4 kg 18.7 kg 2.8 kg 69.3 kg BiH vs regional average 163% 320% 54% 167% 48% 91% Regional comparisons (FAOSTAT) Serbia 8.5 kg 2.0 kg 64.8 kg 7.0 kg 7.7 kg 90.0 kg Croa a 8.6 kg 1.1 kg 26.9 kg 12.8 kg 2.1 kg 51.5 kg TfYR Macedonia 13.5 kg 1.8 kg 15.3 kg 19.5 kg 4.1 kg 50.6 kg Slovenia 21.4 kg 1.1 kg 41.0 kg 19.9 kg 6.2 kg 89.6 kg Average ex-Yugoslavia (excl. BiH and 10.5 kg 1.7 kg 47.5 kg 11.2 kg 5.8 kg 76.3 kg Montenegro) BiH data from FAOSTAT: 7.9 kg 0.5 kg 5.3 kg 7.6 kg 7.6 kg 28.9 kg Source: Mul ple sources, see text

28 h p://faostat.fao.org/site/368/default.aspx#ancor

71 . Overall per capita meat consump on for make up a signifi cant propor on of their BiH is es mated at 69 kg per year, or 91 total meat consump on. percent of the regional average. This value Poultry meat consump on is two-thirds is higher than for Croa a and The former higher than the regional average, though both Yugoslav Republic of Macedonia, and lower TfYR Macedonia and Slovenia show higher than Serbia and Slovenia. Consump on of values, and is the second most important meat by species refl ects the specifi ci es of meat in terms of the quan ty consumed. produc on and consump on in BiH: This analysis indicates that the es mated . Beef consump on is some 60 percent quan es of meat produced on farms, higher than the regional average, second both overall and by species, are en rely only to Slovenia; consistent with the regional pa ern of meat . Sheep meat consump on, whilst s ll consump on and the specifi c features of rela vely low at 5 kg per person per year, is Bosnia and Herzegovina. three mes the regional average; The fi nal row of the table quotes the per . Pig meat consump on is just over half the capita consump on values for BiH from the regional average, with only TfYR Macedonia FAOSTAT website. These values are markedly repor ng a lower per capita value, yet it lower than the es mates made in this chapter, s ll accounts for over a third of all meat refl ec ng the signifi cant underes ma on consump on in BiH and, at 25 kg per by offi cial sta s cs of informal livestock person per year, is the most consumed of all produc on and unregistered slaughter in meats. This fi nding may come as a surprise BiH (as discussed in Sec on 3.9 above, under to some observers, but it has a logic: pig Comparison with slaughter sta s cs). It is meat is generally cheaper than beef,29 and possible that some of the data reported to pigs are well suited to backyard produc on, FAO by other countries in the region include par cularly for households that do not have similar omissions (the low value of pig meat in the land or me to keep ca le or sheep; TfYR Macedonia stands out in par cular, and thus for those segments of the popula on may refl ect underes ma on of household that do include pig meat in their diet, it can produc on and slaughter in that country).

29 See for example h p://www.seebiz.eu/potrosnja-pile ne-u-bih-zbog-niske-cijene-uzletjela-100/ar-24684/ which reports that beef currently costs 40 percent more than pork in BiH.

72 4. Processing

This chapter examines the milk and meat and was used as a staple part of nutri on processing industries. Most of the focus during and immediately a er the confl ict. is on formal processing by registered . Many transport vehicles were destroyed, slaughterhouses and dairies, but a en on is damaged or confi scated, further hindering also given to the important role of on-farm the collec on of such raw material that was and informal processing. s ll available from farms. . Sec on 4.1 gives a brief overview of how . Technological development was arrested, the 1990s Balkans confl ict aff ected the and many key workers were dra ed into the livestock processing industry in Bosnia and army or forced to seek refuge. Herzegovina, and the extent to which it has managed to recover. It is against this background that progress needs to be measured, and the history of . Sec on 4.2 looks at how raw milk and slaughter livestock move from the farm Bosnia and Herzegovina accounts to a large to the processor, forming the bridge from extent for the rela ve underdevelopment Chapter 3 to this chapter. of the subsector, par cularly in terms of the product range and product development. . Sec on 4.3 looks at the structure and func oning of the dairy processing industry. However it is interes ng at this juncture . Sec on 4.4 looks at the slaughtering and to look at how dairies have responded to meat processing industry. changing circumstances in their post-war development. This development can be 4.1 Recent history of the processing divided into three dis nct phases: industry . Up to 2000, most had recovered their pre- war status and many new dairies were The agricultural processing industry suff ered established, ensuring that basic dairy severely during the Balkan Confl ict in the products became increasingly available to 1990s: meet the needs of the market. . The raw material base from milk producers . The next phase, up to 2005, was a me of was fragmented, forcing many dairies to consolida on and gradual moderniza on resort to the import of milk powder for and expansion of processing capacity. Also, recombina on in order to keep the market priva za on of former state-owned plants supplied. was mainly completed. . The meat industry also suff ered serious . Since 2005, foreign companies have invested damage or even destruc on of many plants, in dairies in Bosnia and Herzegovina, mainly with livestock numbers almost decimated. in the larger enterprises. These investments Numbers and prac ces have s ll not from Serbia, Germany and Slovenia saw the recovered, witnessed by the con nuing start of expansion of the product range, dependence on meat imports. for example in new varie es of exis ng . Dairies in Bihač, Mostar and Sarajevo in products such as yoghurt, together with the par cular were damaged, some severely. manufacture of Feta-type cheese. This phase The Milkos dairy in Sarajevo was s ll in also saw the closure of many dairies, mostly very poor condi on in 1995, but has been of small capacity and limited technology, relocated in modern premises, and many which became unable to compete in the livestock farms were destroyed. more demanding and dynamic market. This . Due to this raw material shortage, the phase also saw increased investment by dairy product range was confi ned mainly to local entrepreneurs, in brand new buildings, pasteurized milk, which is simpler to process plant and technology.

73 This background is useful in the analysis of probably each municipality contained at least dairies as they are today, and the Table 4.1 one “mini-dairy”. This la er term is open gives a snapshot of the dairies in Republika to some diversity of opinion and has to be Srpska based on raw milk deliveries during judged within the context of the country; the month of October 2010. within Bosnia and Herzegovina the term “mini-dairy” might be used to refer to a daily The total number of 55 dairies which received milk intake of less than 2 tonnes. milk in the month is derived from the subsidy paid to producers who deliver milk to If we apply the two tonnes daily limit to the processors.30 above data for Republika Srpska, it is evident that some 65 percent of formal processors The report of Dusan Loza focuses, within would be classed as “mini-dairies”, which Republika Srpska, on 13 dairy plants with together process just 8 percent of the milk. daily milk intakes ranging from 500 to 130,000 It is usually these dairies which are most litres; he, and other commentators within vulnerable in terms of sustainability and the sector, indicate that these are the only the ability to adapt to change. It would be “serious” dairies in this en ty. The table above expected that in the rela vely near future shows that the sector is highly polarized, most of them would either merge with with just three dairies processing two-thirds other nearby dairies or disappear altogether, of the formal milk supply in RS. However, though some may manage to survive either the table indicates that there are 19 dairies by producing a niche product or by fi lling a processing at least two tonnes of milk per geographical niche, typically a remote area day and a further nine processing 1–2 tonnes where larger dairies are not interested in daily, plus 27 “microdairies”, coopera ves or collec ng the small volumes of milk or in milk collectors included in the milk subsidy supplying ny local shops. scheme with less than a tonne per day. Milk supply shows seasonal fl uctua ons in Comments received at the SWOT and every country, but October is neither in the verifi ca on workshops suggested that there peak nor the trough, so these data may be was a signifi cant number of milk processors assumed to be reasonably representa ve of outside the formal dairy network, and that the annual picture, and are shown Graph 4.1.

Table 4.1: Dairies and milk collectors in Republika Srpska: Raw milk purchases in October 2010 Average tonnes/ Tonnes/day Number of dairies Share of dairies Share of milk day/dairy > 100 1 2% 118.6 41% 40 < 100 1 2% 40.0 14% 25 < 40 1 2% 25.5 9% 10 < 25 1 2% 12.2 4% 5 < 10 7 13% 46.3 16% 2 < 5 8 15% 24.3 8% 1 < 2 9 16% 12.2 4% < 1 27 49% 12.4 4% TOTAL 55 100% 291 100% Source: RS Ministry of Agriculture, milk subsidy data

30 In the original milk subsidy dataset all of the recipients were described as “dairies”; it was later pointed out that some of these are in fact milk collectors or coopera ves that deliver milk to larger dairies.

74 Graph 4.1: Snapshot of dairies’ milk purchases in Republika Srpska: October 2010

Source: RS Ministry of Agriculture, milk subsidy data

There are no equivalent data for the Farm Survey found that 52 percent of sampled Federa on with which to compare, but it farms had their own cooling tank (though the is probable that a broadly similar situa on na onal share may be smaller, since it is the pertains there. numerous small farms that are most likely to lack cooling tanks). 4.2 From farm to processor Milk is sampled and collected directly from Chapter 3 presented es mates of the these tanks, usually daily, by the dairies. quan es and shares of milk and meat Milk collec ng centres that are delivered to the formal processing industry. This sec on looks brieﬂ y at the Small dairy farms more o en take their milk, marke ng and collec on mechanisms that in churns, to a nearby dairy-owned milk link producers and processors. collec ng centre where, a er acceptance tes ng, it is weighed, sampled, and poured 4.2.1 Milk collec on and transport into the tank for daily collec on by the dairy. These tanks rapidly reduce the milk There are three main ways in which milk gets temperature to 6˚C or below, which greatly from farms to formal dairy processors: reduces bacterial growth. . Direct collec on by the dairy . Delivery by the farmer to a nearby milk Collec on by middlemen collec ng centre Informa on from the milk tes ng laboratory . Collec on by middlemen in Banja Luka indicates that about 20 percent of producers submit their milk to middlemen Direct collec on by dairies for collec on and onward delivery, based There has been considerable investment in upon the average monthly sample numbers on-farm milk cooling tanks, and the Project recorded by the laboratory.31

31 The Project Farm Survey found that around 11 percent of the total milk supply to dairies came via middlemen, though the number of sampled farms supplying middlemen was too small to give much precision to this number. It would typically be the smaller farms that used this route, so the share of milk would be smaller than the share of producers.

75 This system func ons as follows: Milk transport and sampling . Middlemen collect milk – in churns – from The bulk milk tankers are owned and operated about 60 producers each, though the by the dairies; all those observed were of number varies considerably from only a few hygienic construc on and insulated to keep farms to more than 600; this compares to the milk at low temperature un l arrival at an average 340 producers supplying each the dairy. dairy directly. The milk collectors, whether dairies or . The data are in broad agreement for the number of producers supplying to those middlemen, are responsible for taking dairies that have been visited, and the samples monthly of each farm’s milk for number of producers will vary from month composi on and hygiene tes ng in the to month depending on the number of cows appropriate veterinary laboratory. giving milk. Sta s cs on milk collec on and cooling . Dairies in the Federa on are tested in the The structure of milk supply to dairies is Banja Luka laboratory only for trans-en ty shown in the Table 4.2. milk purchases made in Republika Srpska. . Middlemen are registered to collect milk It can be seen from the table that around subsidy on behalf of their producers. 95 percent of farms supplying dairies have 10 cows or fewer, with only 1 percent having . There is no conﬁ rma on that registered herds larger than 20 head (which corresponds dairies receive any milk from middlemen to the structural analysis of ca le farms and it seems that most of the milk collected presented in sec on 3.3 of this report). This by middlemen is delivered to small, situa on leads to: unregistered dairies, typically processing less than one tonne of milk per day. The . High costs of milk collec on – the average laboratory in Banja Luka could not indicate daily milk collected per farm is just over how many such dairies were in opera on, 26 litres for Bosnia and Herzegovina as a though one commentator considered that whole (23 litres in the Federa on and 30 in each municipality would have at least one Republika Srpska); dairy of this type. . Diﬃ culty in promo ng improvements in . No informa on was available on whether raw milk quality; or how such collec on operated in the . Constraints in the supply and loca on of Federa on. suitable milk cooling equipment, where

Table 4.2: Origins of ex-farm milk supplied to dairies – 2010

FBiH RS BiH total Herd size (no. milking cows) No. of Share of No. of Share of No. of Share of farms farms farms farms farms farms < 5 9,644 83% 8,655 86% 18,522 84% 5 to 10 1,504 13% 880 9% 2,416 11% 10 to 20 381 3% 398 4% 793 4% > 20 137 1% 167 2% 314 1% TOTAL 11,666 100% 10,100 100% 22,045 100% Share of BiH total 52.9% 45.8% 100% Milk purchased by dairies 99,770 t 47% 111,992 t 53% 211,762 t 100% 8,552 litres/year 11,088 litres/year 9,725 litres/year Milk purchases per farm 23 litres/day 30 litres/day 26 litres/day Source: Dusan Loza

76 farms producing an average of only 26 litres • Butchers and restaurants for informal a day could not cool their milk according to slaughter; the basic necessi es of dairy hygiene. This • Registered slaughterhouses, that travel poten al problem has been largely resolved round the farms to secure the raw over the last fi ve years by establishment of material that they need; milk collec on points where many producers • Poultry slaughterhouses, for whom bulk their small amounts of milk for cooling broilers were produced on contract; and daily collec on by road tanker. • Livestock traders who buy from farmers Dairies report that at least 90 percent of and then sell the animals to formal or milk purchased is now cooled at the point of informal slaughterers or, in the case of milk recep on to 6°C or less, indica ng the breeding and rearing stock, to other eff ec veness of providing cooling facili es at farmers. milk collec on points. The impact of this in . Local livestock markets, which are mainly improving milk quality is analysed in sec on 7.3. for farmer-to-farmer sales of breeding Farmgate milk price and rearing livestock but may also be frequented by livestock traders and even The surveyed dairies reported paying an slaughterhouse buyers. average price of 0.68 KM per litre of milk (which does not include milk subsidy). Unfortunately no formal data could be found on the rela ve importance of these diff erent The quality payment system can increase the routes, but the Project Farm Survey indicated farmgate price by up to 5 percent, or decrease the following split by weight for slaughter it by as much as 10 percent. stock leaving the farm: The Project Farm Survey recorded a range of . Sale for informal slaughter (which may values, with the following averages (excluding also include some sales to middlemen subsidy): that eventually end up at registered . Direct sale to consumers: 0.94 KM/litre slaughterhouses): 47 percent . Sale to middlemen: 0.55 KM/litre . Sales to registered slaughterhouses: 53 percent . Sale to dairies: 0.52 KM/litre The rela ve importance of the diff erent This indicates that the extra eff ort of marke ng channels varies greatly from marke ng direct to local consumers can lead species to species, with poultry in par cular to a signifi cant increase in income from the tending to move direct from the farm to dairy business. registered slaughterhouses. 4.2.2 Livestock marke ng Farmgate livestock prices Livestock marke ng func ons in many V e r y l i le price informa on was given by the diff erent ways, including: surveyed meat processors, and unfortunately . Direct sale and collec on from the farm, to: Bosnia and Herzegovina has no public market

Table 4.3: Average prices by species and marke ng channel

Ca le Sheep Pigs Poultry Informal slaughter - per kg live weight 5.00 KM 5.10 KM 3.30 KM 1.90 KM - per kg dead weight 9.90 KM 11.40 KM 4.40 KM 2.60 KM Registered slaughterhouse - per kg live weight 4.00 KM 5.60 KM 3.30 KM 2.40 KM - per kg dead weight 8.00 KM 12.40 KM 4.40 KM 3.20 KM Source: Project Farm Survey, weighted according to the Master Sample and oﬃ cial sta s cs for Legal Units

77 informa on system, so the only source of visited in Bosnia and Herzegovina that the data on this topic is the Project Farm Survey, dairy processing industry has recovered which found the following average prices by remarkably well, and developed a modern species and marke ng channel. and vibrant successor capable of facing the It should be noted that these are weighted future possibility of EU membership and all average prices for all classes of stock that will entail. slaughtered so, for example, the ca le price . Currently, more than 60 percent of dairy includes calves, cull cows and fa ened bulls. cows and milk produc on in FBiH are in Tuzla, Una-Sana and Zenica-Doboj cantons, 4.3 Milk processing whereas Livno canton has recorded the This sec on looks at formal milk processing by highest recent growth of milk output at registered dairies. The focus is on processing more than 50 percent. by the registered dairies recognized by . For RS, 70 percent of milk produc on is the en ty ministries and by industry generated by Prijedor, Bijeljina and Doboj commentators; it is understood that there is districts, with more than half of that also a semi-formal level of small local dairies, produced in Prijedor district. but it was not possible to gain any systema c Development since 2005 shows clear changes, picture of these. which are tabulated below. 4.3.1 Recent development of the dairy The table illustrates that overall, the following processing sector changes have occurred in Republika Srpska: Despite the tragedies of the 1990s, it is . Milking cow popula on over the period has clear from the thirteen dairies recently reduced by 8.3 percent,

Table 4.4: Five years analysis from 2005 –Republika Srpska Annual Annual Number of Milk Annual Milk yield/ Year or 5-year or 5-year cows produc on change cow change change 2005 155,900 - 302 m litres - 1,935 litres - 2006 152,200 - 2.4% 331 m litres + 9.6% 2,172 litres + 12.2% 2007 154,400 + 1.4% 401 m litres + 21.3% 2,597 litres + 19.6% 2008 144,200 - 6.6% 405 m litres + 1.0% 2,809 litres + 8.2% 2009 143,000 - 0.8% 405 m litres + 0.0% 2,833 litres + 0.9% 2009/05 - 8.3% + 34.3% + 46.4% Source: Sta s cal Agency of BiH Table 4.5: Five years analysis from 2005 – Federa on of BiH Annual Annual Number of Milk Annual Milk yield/ Year or 5-year or 5-year cows produc on change cow change change 2005 156,900 - 305 m litres - 1,947 litres - 2006 157,600 + 0.4% 312 m litres + 2.3% 1,969 litres + 1.1% 2007 150,200 - 4.7% 313 m litres + 0.4% 2,088 litres + 6.0% 2008 150,000 - 0.1% 322 m litres +2.8% 2,188 litres + 4.8% 2009 148,400 - 1.1% 321 m litres - 0.3% 2,163 litres - 1.1% 2009/05 - 5.4% + 5.3% + 11.1% Source: Sta s cal Agency of BiH

78 . Total milk produc on has risen by more (compared to 8.3percent in RS), milk yields than a third, and improved more slowly (rising by 11 percent . Individual cow milk yield has increased by compared to 46 percent), resul ng in total some 46 percent. milk produc on rising much more slowly than These results can be compared with the in RS (up 5 percent compared to 34 percent). changes in the Federa on during the same This may reﬂ ect be er condi ons for forage period, which are shown in the Table 4.5. produc on in parts of RS, where herd sizes are also slightly larger, averaging 2.7 cows This shows that the dairy farm sector in the compared to 2.0 in FBiH. Federa on has performed rather less well than in Republika Srpska. Although milking The trend is clearly illustrated in the following cow numbers reduced by only 5.4percent graphs of cow numbers and milk produc on:

Graph 4.2: Comparison of cow numbers in the two en es since 2005

Source: Sta s cal Agency of BiH

Graph 4.3: Comparison of farm milk produc on in the two en es since 2005

Source: Sta s cal Agency of BiH

79 Table 4.6: Milk processed – 2010 Federa on Republika Srpska BiH Capacity Milk Milk Milk group, No. of No. of No. of processed, % processed, % processed, % tonnes/day dairies dairies dairies tonnes/day tonnes/day tonnes/day > 100 1 102 26% 1 138 55% 2 240 37% 50 to 100 2 121 31% 1 60 24% 3 181 28% 25 to 49.9 2 70 18% 0 0 0% 2 70 11% 10 to 24.9 3 52 13% 1 22 9% 4 74 12% 5 to 10 2 16 4% 3 19 8% 5 35 5% < 5 10 30 8% 7 12 5% 17 42 7% TOTAL 20 391 13 251 33 642 Source: Dusan Loza (no informa on available on smaller and unregistered dairies) . The propor on of total milk produc on that covered by sta s cs; one of the goals of is purchased by registered dairies is around the Project Farm Survey was to gain greater 30 percent according to oﬃ cial sta s cs, insights into such informal marke ng. or around 34 percent on the analysis of 4.3.2 Current structure of the dairy Chapter 3. Either way, this is low compared processing industry to many countries in the region (e.g. 65 percent in Serbia). The Table 4.6 gives a breakdown of registered . Sta s cs indicate that this share reached dairies by daily throughput: a maximum of around 32 percent in 2009, More than 75 percent of milk is processed almost immediately prior to the world by just 7 dairies in Bosnia-Herzegovina. economic slump. This trend towards larger, fewer processors . With such a low propor on of total milk going commenced during 2005, and generally into formal processing, it is diﬃ cult to analyse this is a natural process within the food the sector fully, since on-farm processing, processing industry, where companies realize direct sale and green market sales are poorly there are economies of scale. However, Graph 4.4: Tons of raw milk purchased by processors – Bosnia-Herzegovina

Source: Dusan Loza

80 there is o en also a reverse trend, whereby Sarajevo and Banja Luka to cover a range some processors become more specialized of diﬀ erent sized dairies in their respec ve in niche products, perhaps into only one or en es. The purpose of the survey was to two products, such as Livanski Sir, a form of verify such data as were ini ally available and cheese which is made only by two dairies in to provide an impression of the current state the Federa on. of the companies. Visits were supported by ques onnaires for dairies to complete and 4.3.3 Raw milk deliveries for processing return. Not all were returned even a er The Graph 4.4 shows the trends in raw milk reminders were sent. purchased by registered processors since 2005: The Tables 4.7 give key data on known dairies, with those visited marked with an asterisk*: The graph indicates that supplies of milk to processors increased steadily un l 2009 . The annual milk purchases by registered when the economic downturn led to some dairy plants are almost 136,000 tonnes. falling away of supplies. The Republika Srpska . The average daily opera onal capacity of began to show recovery in 2010 but this has dairies is 19,500 litres, equivalent to about not yet been observed in the Federa on. 19,000 tonnes of raw milk. . Milk is supplied by almost 12,000 producers. 4.3.4 Produc on proﬁ les of dairies . The average amount of milk per producer Visits were conducted to thirteen dairies, per day is 49 litres. (This excludes the single selected by the Agriculture Facul es of large supplier reported by dairy 13).

Table 4.7: Key data on known dairies –Federa on of Bosnia and Herzegovina Tonnes per Litres per Dairy Litres per day No. of farmers year farm per day 1* “Meggle”, Bihać 37,398 117,800 3,200 37 2 “Inmer”, Gradačac 26,014 71,271 931 77 3* PPM ,Tuzla 18,197 49,855 2,363 21 4* “Milkos”, Sarajevo 16,542 45,321 820 55 5* Mljekara Livno 8,978 24,597 810 30 6 ZIM, Zenica 5,829 15,970 1,235 13 7 “Tippas”, Posušje 3,906 10,701 250 43 8 “Poljorad”, Turbe 3,067 8,403 520 16 9* “Puđa & Perković”, Livno 4,007 10,980 350 31 10 “Saraj-Milk”, Maglaj 1,743 4,775 170 28 11 “Agrocentar”, Gornji Vakuf 1,650 4,521 249 18 12 “Milk-San”, S. Most 1,608 4,405 120 37 13* “Movita”, Mostar 1,585 6,500 1 6,500 14 “Milchproduct”, Čelić 1,360 3,726 186 20 15* “Noćkokomerc”, Živinice 2,409 6,600 350 19 16 “Sirko”, Gračanica 780 2,137 120 18 17 “Mlijekoprodukt”, Vel. Kladuša 278 762 65 12 18 “Promilk”, Prozor 220 603 41 15 19 Mljekara Kupres 80 219 30 7 20 “Jezerka “, Jezersko 278 762 55 14 49 TOTAL 135,929 389,908 11,866 (excl. # 13) Source: Dusan Loza et al.

81 Table 4.8: Key data on known dairies – Republika Srpska Tonnes per Litres per Dairy Litres per day No. of farmers year farm per day 1* “Mlijekoprodukt”, Koz. Dubica 50,608 138,652 3,287 42 2 “Natura-Vita”, Teslić 22,070 60,466 2,032 30 3* “DTD”, Njego na 9,675 26,506 1,154 23 4* “Pađeni”, Bileća 2,557 7,005 401 17 5 “Dule”, Bijeljina 2,278 6,241 200 31 6 “Milko”, Prijedor 2,190 6,000 340 18 7* Mljekara Šipovo 1,137 3,115 320 10 8 “Bianca”, Zvornik 1,128 3,090 290 11 9* “Glogovac”, Nevesinje 929 3,720 110 34 10* “Perfeto”, Nevesinje 520 1,700 60 28 11 “Dramon”, Pale 210 575 7 82 12 “Četković”, Rudo 202 553 68 8 13 “Maja”, Gacko 168 460 56 8 TOTAL 93,672 258,083 8,325 26

. The fi ve dairies processing more than 20 overall total of 230,000 tonnes per annum, tonnes of milk daily account for 79 percent collected from a similar propor on of of all milk purchases in the Federa on and producers. were supplied by 68 percent of producers. 4.3.5 Milk and dairy products . Dairies in Republika Srpska purchase less manufactured milk compared to the Federa on, at almost 94,000 tonnes. The Table 4.9 shows the range of products . The average daily opera onal capacity made by dairies in Bosnia and Herzegovina, of these dairies is almost iden cal to the and the number of registered dairies Federa on at 19,850 litres, equivalent to producing each product: about 19,000 tonnes of raw milk. The table shows that marketed milk (UHT . Milk is supplied by 8,325 producers, this and pasteurized) and fermented products are number comparing very well with data the most commonly produced, followed by supplied by the Veterinary Ins tute from cheese, cream and dairy spreads. These data its milk tes ng laboratory in Banja Luka refl ect the number of dairies producing each (an average of 8,064 producers supplying product, rather than the quan es produced, dairies are sampled and tested every which are given in the table below. month); there are no comparable data for the Federa on. This profi le is in quite sharp contrast to that . The average volume of milk collected of the EU, where marketed milk accounts for daily per farm is almost half of that in the around 15 percent, fermented products for Federa on, at 26 litres. 10 percent, cheese for 40 percent and other products 25 percent, of all dairy products . Three dairies with a capacity of 20 tonnes made. These diff erences arise principally from or more per day process 87 percent of milk comparing a single, tradi onal type of market from 78 percent of all producers. with the much broader spectrum of na onal Dairies in the Federa on account for a tastes of the EU na ons. However, what it 60 percent share of milk purchases of the does show is that there is li le emphasis in

82 Table 4.9: Product proﬁ le of dairies –2010

Number of dairies Tariﬀ Code Product Federa on Republika Srpska BiH 0401 Pasteurized milk 13 9 22 0401 UHT milk 5 2 7 0401 All cream 16 12 28 04021 Milk powder 1 1 2 0403 Yoghurt 13 11 24 0403 Kiselo mljeko 3 0 3 04039 Other fermented 10 6 16 04051 Bu er 3 2 5 04052 Dairy spreads 11 10 21 Cheese: 0406 - fresh 15 13 28 0406 -mozzarella 0 1 1 0406903 - semi-hard 6 2 8 0406906 - hard 3 0 3 0406 - other 13 15 28

Bosnia and Herzegovina on long shelf-life Marketed milk, (i.e. pasteurized and UHT) products such as milk powder, concentrated accounts for more than half of all milk products milk and bu er, resul ng in only 3 percent in processing, but has not signiﬁ cantly of milk used for all these categories; even increased over the last ﬁ ve years. Raw milk within cheese produc on, the emphasis is use in cheese making has increased by almost on fresh and semi-hard cheeses, rather than 50 percent over the same period with other on long-life hard cheese. Thus Bosnia and products remaining fairly stable. Herzegovina clearly exhibits a preference for Overall, dairy product output has increased fresh or short shelf-life dairy products, with in both en es over the period from 2005. the notable excep on of UHT milk. Republika Srpska has increased output by

Table 4.10: Output of products by dairies Pasteurized Fermented UHT milk Cheese Other products Total milk products tonnes % tonnes % tonnes % tonnes % tonnes % tonnes FBiH 2005 4,645 4% 52,969 50% 23,419 22% 19,872 19% 4,889 5% 105,794 2010 3,730 3% 75,487 61% 15,692 13% 24,100 20% 4,189 3% 123,198 RS 2005 3,950 6% 32,644 49% 18,578 28% 10,895 16% - - 66,067 2010 2,629 3% 44,101 48% 20,512 22% 23,122 25% 1,808 2% 92,172 BiH total 2005 8,595 5% 84,613 49% 41,997 25% 10,852 18% 4,889 3% 170,946 2010 6,359 3% 119,591 53% 46,204 21% 47,222 28% 6,007 3% 225,383 Source: Dusan Loza

83 40 percent, the Federa on by only 16 percent, Organiza on for Standardiza on (ISO) giving an average of 32 percent for Bosnia and related to management rather than and Herzegovina as a whole. processing. . Five dairies report that they have a ained 4.3.6 Assessment of visited dairies an ‘export number’, which relates to their The table below shows twelve key parameters ability to export to countries of CEFTA. This that were assessed during visits, which always is one step towards achieving full export included a tour of the processing plant: status and indicates that dairies are very much aware of what the future holds. Table 4.11: Twelve key parameters assessed during visits to dairies 4.3.7 Financial state of dairies Parameter Average score Of the 13 dairies visited, only one, small dairy Good Manufacturing Prac ces 90% seemed vulnerable, as the premises and plant Hygiene and HACCP 92% were well below EU standards. It is unlikely Milk cooled at recep on 98% that the high cost of a new building and plant Processing technology 88% renewal could be met. Packaging equipment 84% Of the other 12, they vary from small to large Storage facili es 66% capacity (5 tonnes per day milk intake to Quality control and laboratory 60% 120 tonnes) and seem to be in a sound fi nancial Premises – condi on 74% condi on. Most of them have invested Environs – diness 72% over the last three years in improvement of Urgent need for fi nance 10% premises and modern equipment, and state Awareness of: that their indebtedness is low or manageable Environmental needs 60% and that further funds for investment can be EU regula ons 74% sourced either from their own reserves or Source: Project processor survey from aff ordable lenders.

. There was only one excep on to HACCP Two dairies, one of 5 tonnes daily capacity cer fi ca on, and it seems likely that this and the other 8 tonnes, are in the advanced dairy will face diffi cul es in con nuing to stages of building new premises to conform trade for longer than the short term. to EU standards. The new buildings will accommodate new plant of higher capacity . The principal weakness was to be found to allow for expansion of their opera on for in the rather haphazard approach to the next fi ve years. laboratory facili es, in many ways similar to the Serbian situa on. This lack is most 4.3.8 Interna onal comparisons o en due to reliance on former state organs which undertook the major role in milk The Table 4.12 shows how other countries’ tes ng, therefore nega ng the need for a dairy industries perform in respect of milk laboratory in each dairy. produc on, collec on and purchases. . Whilst the perceived need for fi nance is The table clearly shows that Bosnia and much lower than an cipated, this refl ects Herzegovina has some way to go in terms the past four years of investment ac vity of providing a commercially compe ve rather than any lack of future funds. raw milk supply to its dairy processing However, it is considered that, with only sector. The share of total milk delivered to two excep ons, funds are not needed in the dairies is the lowest of any of the countries short term. or groups in the table. The average daily . Most dairies have also secured other milk collec on per farm is also very low by cer fi ca on, mainly from the Interna onal established EU standards, though similar to

84 Table 4.12: Performance of the dairy industries of other countries with respect to milk produc on, collec on and purchase

Western Balkans EU Measure BiH Croa a Serbia EU 15 EU 12 EU 27 Number of cows 293,000 226,000 585,000 18.1 m 5.5 m 23.6 m Milk yield per cow 2,502 litres 3,873 litres 2,622 litres 6,646 litres 6,352 litres 5,250 litres Milk produc on 734,000 t 875,000 t 1,534,000 t 120 mt 29 mt 149 mt Milk collec on 233,000 t 675,000 t 825,000 t 115 mt 18 mt 133 mt Share purchased by 32% 77% 65% 96% 62% 89% dairies Farms in collec on 22,100 17,500 76,000 455,000 1,122,000 1,577,000 system Daily average 10.5 litres 38.6 litres 10.9 litres 253 litres 16 litres 84 litres collec on per farm

Serbia and not so much lower than in the Imports are mainly of fresh, chilled and frozen new Member States. Increasing this fi gure carcass meat, but there is also some trade in will decrease the collec on cost per litre live animals for slaughter, chiefl y from Serbia. and so help to enhance the interna onal compe veness of Bosnia and Herzegovina. Some processors report that imported meat supplies half of their total intake – and would 4.4 Meat processing be even higher if “Cer fi cate of origin” rules did not require them to use a minimum 4.4.1 Background percentage of domes c meat. These inputs The meat processing industry suff ered serious originate from neighbouring states and from damage during the confl ict of the early 1990s, the EU, and are mainly of beef and chicken, as where factories and facili es were destroyed indicated by the Table 4.13. in many places, par cularly in the large towns Fresh beef imports have increased more than such as Sarajevo. twelvefold since 2008, reportedly due to local Following the confl ict, meat processing was shortages plus an increasing demand for beef assisted in its recovery by donor agencies products, whilst the volumes of other meat such as USAID, and perhaps recovered faster from other species have been rela vely stable than primary produc on, because at present over the same period. processing capacity exceeds the local capacity The table shows that for livestock produc on. . Poultry meat represents the largest share Most processing companies are located close (35 percent) of meat imports by quan ty, to major centres of popula on, par cularly and has the lowest price per kg. Banja Luka, Bijeljina and Sarajevo. . Beef imports represent 40 percent of overall 4.4.2 Raw material sources annual meat import by value. Most processors buy in meat either from local Exports are virtually nil, and relate only sources or as imports when local supplies to edible off al products at 3,770 tonnes are insuffi cient. Domes c meat quality is genera ng about 11 million USD, an average also stated to be lower than that required price of 2.88 USD per kg. This is probably re- for processing, and up to 30 percent more export of part of the imported commodity, expensive than imported meat. but at a 22 percent mark-up.

85 Table 4.13: Breakdown of meat imports in 2010

Quan ty Value Average price Commodity Tonnes Share KM share (KM/kg) Beef, fresh/chilled 6,904 20% 26,393,000 24% 3.82 Beef, frozen 3,692 11% 17,279,000 16% 4.68 Pork 4,776 14% 20,823,000 19% 4.36 Edible oﬀ al 5,193 15% 12,218,000 11% 2.35 Poultry 12,106 35% 21,265,000 19% 1.76 Other 1,601 5% 11,594,000 11% 7.24 TOTAL 34,272 100% 109,573,000 100% Source: Customs data

The trade gap for meat is therefore about farming has recently (2009) been developed 100 million USD, indica ng that import on its territory. subs tu on would contribute signifi cantly to the economy. Most processors buy meat from registered slaughterhouses, though a few have their 4.4.3 Slaughtering own facili es within the factory complex. Those slaughterhouses seen fell short of EU Many slaughterhouses were destroyed in the standards in many respects, but companies confl ict, and resort was made to imported are aware of this and are in the process of carcasses in order to sa sfy the needs of addressing the situa on. the consumer for fresh meat. The current situa on is a legacy of that decision, and is There are many small slaughterhouses currently the subject of discussion by major reported to be supplying butchers’ shops, processors who are considering what structure and there are reports of rural operators would best suit the country’s future needs also. Whilst these slaughtering businesses and trading status; small slaughterhouses are not recorded in any central register, the will not fi nd it easy to receive EU approval veterinary inspectorate is required to mark and it might be be er to focus on a limited any carcass with a stamp of clearance for number of regional facili es, perhaps three human consump on. However, the veterinary per en ty, which could supply the processors records state only that a visit was undertaken with domes cally produced meat. Un l the to cer fy the carcasses, without any details livestock industry increases it capacity and regarding either the numbers of animals or ability to provide a steady stream of slaughter the species slaughtered. livestock, any expansion of slaughtering The meat processors visited indicated that facili es needs careful considera on and a high propor on of sheep and goats are coordina on, and improvements to exis ng slaughtered in this way and their meat used plants should have priority for investment. without further processing. Poultry are Processors in the Federa on manufacture predominantly slaughtered in specifi c and meat products from beef, chicken and turkey purpose-built premises, usually by gassing whereas Republika Srpska processes pork as prior to further treatment on the produc on well but not turkey meat, although turkey line.32

32 This accords with the ﬁ ndings of Chapter 2 of this report, that only 20 percent of sheep meat but close to 90 percent of poultry meat is processed in registered slaughterhouses, with pig meat and beef lying between these two extremes.

86 Slaughter in the Federa on is according to study concluded that the following solu ons Halal procedures, whereas Republika Srpska were likely to be most cost-eff ec ve in Bosnia has no need to do so. Halal is a term assigned and Herzegovina: to an ar cle or procedure which is permissible . Solid slaughterhouse waste: Incinera on for use according to Islamic law. The term on-site at larger slaughterhouses, with is not confi ned to animal slaughtering a municipal or state service to collect procedures but is applied in a manner similar and incinerate waste from smaller to kosher. Halal is defi ned as “permissible” in slaughterhouses. rela on to an object or procedure, whereas . Contaminated water from slaughterhouses: the method of slaughtering an animal is known as dhabiha. This procedure consists of • minimize the quan ty of contaminated using a well-sharpened knife to make a swi , water by processing blood into deep incision that cuts the front of the throat, usable by-products and by keeping the caro d artery, trachea and jugular veins uncontaminated cooling water separate but leaves the spinal cord intact. from contaminated wash water and sterilizing water; Slaughterhouse waste • then treat on-site to make it safe for There is no detailed record of the disposal discharge into the public sewage system. of waste material from slaughterhouses, the . Poultry waste (dead poultry): Incinera on majority of which are capable of handling only on-site at the large commercial poultry up to 60 head per day. Slaughterhouse waste farms which dominate this sector. needs to be collected and either incinerated . Fallen stock (other than poultry): Collec on or processed in a recovery or rendering plant, and incinera on by the municipal or to eliminate pollu on and add value from the state service handling waste from smaller subsequent by-products recovered. slaughterhouses. Data from the sta s cal offi ce in Republika Unfortunately li le progress has been made Srpska indicate that about 300 tonnes in implemen ng these recommenda ons, of slaughterhouse waste is processed or and so Bosnia and Herzegovina is s ll without otherwise recovered, as skins or hides and an adequate solu on to the problem of melted fat of pigs, sheep and beef. This disposing safely of slaughterhouse waste and represents a small por on of what might be fallen stock. expected from the produc on of more than 100,000 tonnes of meat per year.1 4.4.4 Processing plants The ques on of safe disposal of There are only 20 known meat processors slaughterhouse and other animal wastes was in Bosnia and Herzegovina, mostly with addressed at length in a 2005 study funded small- to medium-scale opera ons producing by the EU CARDS programme.2 BiH adopted a 5 to 30 tonnes of product per day. The waste management strategy in 2000 and had total annual output of all processed meat by 2005 already adopted EU-harmonized laws products is es mated to be about 18,000 on waste management and on air protec on, tonnes, according to sources within the with the study no ng that further legisla ve industry; this represents around 12 percent work was needed to implement other relevant of the total supply of meat from registered aspects of the acquis, such as Direc ve slaughterhouses and imports. Ques onnaires EC 1774/2002 on animal by-products. The were sent in advance to those selected for

33 Total meat produc on by registered slaughterhouses was es mated as 115,000 tonnes: 32,000 tonnes beef; 4,000 tonnes sheep meat; 24,000 tonnes pig meat; 55,000 tonnes poultry meat. 34 “ANIWASTE: The integral solving of waste problem from farms and slaughterhouses in NW BiH region –Feasibility study”, Agency for Development of Small and Medium Enterprises Srbac – APIS, 2005.

87 visits and to all others to record their key Waste material is collected by the local data. The response was very low and only authority, as a separate category of waste, for four ques onnaires were completed and fi nal disposal. returned. 4.4.5 Product range With one excep on, the seven meat processors visited were all well equipped in clean, The types of tradi onal product commonly modern premises to produce the tradi onal produced include: variety of Balkan products (see sec on . Cooked sausages; 4.4.5 below). The expected equipment for . Short shelf-life sausages; meat prepara on and subsequent processing . Long shelf-life sausages, usually smoked; was present, though the processes are reliant . Sliced meat; on a high level of manual labour compared . Meat paste; to dairies, for example. This is partly due to . Mortadella; the batch nature of meat processing, as meat . Smoked meat; does not lend itself readily to con nuous . Bacon; and mechanized processing. Also, as meat . Dried meat; processing in Bosnia and Herzegovina is . Salami; rela vely small scale, more automated . Pork fat; technology might be neither appropriate nor . “Pršut” ham. aff ordable. The products are made from beef, pork, All visited processors display HACCP chicken and turkey, and usually packed in cer fi ca on, but there is some doubt that all a rac vely printed, clear plas c pouches the prescrip ons are suffi ciently respected, which are vacuum-packed and sealed, though par cularly in general cleanliness of the products off ered at high net weight, such as manufacturing area and in one case in the 5–7 kg may be without such outer packaging. condi on of employees’ protec ve clothing. In Republika Srpska, data suggest that 75 percent of meat products are from beef Four companies are in the process of and veal, with diff erent varie es of sausages upgrading their processing or slaughtering being by far the most common product. facili es, but the current economic situa on is causing them some delay. Product shelf-life varies between 7 and 180 days according to variety, with some products All of them are aware of the EU requirements requiring ageing in the factory for up to 90 and are in the process of implemen ng the days. These matured products entail having necessary measures. cash ed up un l the point of sale three The highest cost item is reported in respect months later, a risk which is accepted as of raw material, (in one case as much as necessary in sa sfying market demand. 75 percent of total expenses) where carcass Companies produce at least 40 diff erent quality is paramount to the produc on of product lines (one markets 90), though many processed food. of these are simply diff erent net weight Processors with adjacent slaughtering packages of the same product. facili es usually market fresh meat as well, Smoked products can be either cold or which requires a fresh meat area in the factory hot smoked, and are o en off ered as both separated from the processing plant, to varie es. conform to regula ons. The slaughterhouse is also isolated from the factory processing One company producing a small range of area with no common entrance or exit and goulash and meat paste products uses only separate staff . ns for packaging, and uses only boneless

88 meat as raw material for ease of processing with an output of 8 tonnes per day. Turnovers and to minimize wastage. of this scale should allow for confi dence in inves ng for the future, and most businesses 4.4.6 The market have planned for some addi ons or The domes c market consists almost en rely improvements. These include: of tradi onal Balkan products as outlined . The establishment of large-scale animal above. Imports from TfYR Macedonia, Croa a produc on (pigs and beef) together with and other neighbours are mainly of a similar slaughterhouse and rendering plant; type. . Equipment for cold smoking; In common with other processed foods, such . Effl uent treatment plant; as dairy products and fruit and vegetables, it . New processing premises to EU standards. appears that there is hardly any penetra on of the market by European-style meat It is diffi cult to escape the view of op mism products, indica ng that the domes c market that these companies project, and if successful is strongly tradi onal in its requirements. these enterprises will represent the future of meat processing in Bosnia and Herzegovina. Exports go chiefl y to CEFTA countries, where export cer fi ca on has been granted. 4.4.8 Meat processing survey Three companies have arranged exports to neighbouring EU countries by the expedient The processor survey was designed to of sister businesses, in Austria for example, include meat processors as well as dairies, although the procedure was not fully and ques onnaires were sent in advance to explained. (This vagueness also applied when fi een meat processors. Only four of these fi nancial ma ers were discussed, so all fi gures ques onnaires were completed and returned, quoted should be viewed in this context). and meat processors were generally reluctant to reveal any fi nancial data either through the Companies complain of “anarchy” when ques onnaires or during the visits. discussing foreign trade of meat and meat products, and consider that the government Slaughterhouses should be more protec onist and also In the two cases where there was a red introduce export subsidies. It was claimed meat slaughterhouse a ached to the meat that Bosnia and Herzegovina is the only plant being visited, the operators stated that CEFTA member not to provide export these were not up to the required standard subsidies, thereby placing its exporters at a and not suitable for a visit. However, one compe ve disadvantage compared to the poultry slaughterhouse did complete the other countries. ques onnaire, and the key points are given 4.4.7 Management and fi nance below: . The unit has been in opera on since 2006 The majority of businesses are private and and employs more than 200 staff to handle family owned, o en with a long tradi on of about 2,200 chickens per hour, which meat butchering and processing. They exhibit represents just under half of the design a professional approach to management and capacity. marke ng, and each company has an air of . prosperity which gives hope for the future of The company processes broilers which the industry. are over 90 percent locally produced. The total intake of birds for 2010 was reckoned Annual turnovers are said to be up to 15 to be approximately 15,000 tonnes, at an million KM for a plant producing 30 tonnes of average price of 1.86 KM/kg for local birds product per day. This corresponds quite well and 1.97 KM/kg for the small amount of with a fi gure of 5.5 million KM by a company imports.

89 . The factory operates under full HACCP Product range and is cer fi ed to slaughter according to Halal prac ces. With only one excep on, processors produce a virtually iden cal range of products, which . All factory effl uent is treated on site. are diff eren ated mainly according to pack . The products comprise both fresh and labelling and product branding. Packaging is frozen tradi onal cuts, and are mainly sold a rac ve, extremely durable and performed into the local market. using modern materials and packing machinery. . There have been signifi cant recent The range of product is targeted to the investments of about 4.2 million KM, mainly domes c market, plus countries within the in plant and equipment, and a further 5.1 CEFTA trading group, which also compete million KM is planned for the next phase of on the BiH market with their imports. Future investment. expansion into other markets, for example in the EU, is likely to require widening and Meat processing plants adapta on of the product range. Six meat processors were visited, with the Processors iden fi ed raw material as their view to assess the current status of the highest single cost, as much as 60 percent industry and its needs in progress towards EU of total costs in one or two cases. Beef is the accession. most popular raw material for processing, although poultry meat is increasing in its In general, meat processing is small-scale popularity and product range. For example, compared to EU na ons, with factories one processor sources turkey meat within producing from 5 to 30 tonnes of product per Bosnia and Herzegovina and has successfully day. introduced a unique range of smoked and Processors showed awareness of the needs for sausage products based on turkey. the future as well as suffi cient knowledge and Much of the processed meat output is of experience of their businesses. Companies sausages, both short and long shelf-life have achieved HACCP cer fi ca on as well as (up to 120 days). Dried and smoked meats management cer fi ca on such as ISO. Meat are also popular and there is a variety of processors in the Federa on do not process “pasteta” (paté) products. Plants that make pork meat, although some pork products are a high propor on of long shelf-life and slow- available on the market. maturing products are more vulnerable to cash fl ow diffi cul es, yet companies do not Raw material supply complain of serious outstanding creditors. Most processors import meat from One or two factories also manufacture neighbouring countries, and some also from canned meat products, using retort-sterilizers the EU, due to the lack of suffi cient local for goulash and similar products. Cans are supplies and reportedly indiff erent quality. imported ready-printed from Serbia and Certainly, the trade defi cit of more than Croa a. Some processors only use frozen raw USD 100 million indicates that the primary material, o en boneless, thus reducing their livestock sector in Bosnia and Herzegovina is levels of waste. insuffi cient to sa sfy domes c demand. Investment plans Up to fi y diff erent ingredients are used in meat prepara ons, and many of these Companies are increasingly looking to invest also need to be imported. The industry is in cold-smoking technology to complement signifi cantly dependent on imports, indica ng the more usual hot-smoking and many opportuni es for import subs tu on if the have already invested in new buildings livestock sector can rise to the challenge. and machinery. There is an atmosphere of

90 progress and a lack of “fear of the future” ini ally on local product requirements, but with within the factories visited, most of which are clear evidence now of looking at compe on family owned, some of them for more than from imports of more specialized products. two genera ons. Import of raw materials Two companies are in the process of establishing their own farms for producing The signifi cant role played by imported raw livestock, to give control over the supply, materials for the meat industry can be seen as price and quality of the raw material. In one a strength (by adding value and crea ng jobs case, they are looking at rearing 1,000 beef in the processing sector) or as a weakness (in ca le and producing 20,000 pigs per annum. terms of balance of trade and possible missed opportuni es by the farm sector). Either way, The annual turnover of plants clearly is related it is a current fact, though it is important to to their output and product range, but for an note that import of raw material is confi ned output of around 1,000 tonnes of meat, 12 almost en rely to the meat processing million KM has been indicated. This company industry, with just a very small cross-border has also prepared plans for building of a new trade in raw milk. slaughterhouse and waste rendering plant, and is seeking funds of some EUR 3.5 million. Areas for further development There is a general lack of environmental 4.5 Conclusions awareness in respect of effl uent treatment and In many respects, the meat and milk disposal, and a need to develop a programme processing sector in BiH has made signifi cant to reduce the waste of raw material, especially achievements in rebuilding and developing in meat processing. However, the import of a er the confl icts of the 1990s, though there frozen meat for further processing does result are s ll a number of weak or underdeveloped in a lower propor on of waste. areas that require further a en on: The reclama on of waste from both Achievements slaughtering and processing is poorly developed, resul ng in lost opportunity for The processors consist of a vibrant group of the produc on of dried blood, rendered fat mainly family businesses, and those that are and gela ne, which would add to profi tability owned by foreign investors are also secure of the businesses. and sustainable. The rela vely unsophis cated product range, Premises – except those for the slaughter especially in dairy products, renders export of red meat – are in excellent condi on, poten al of a low order and confi ned to packaging is a rac ve and modern, and CEFTA members. Product development and product quality is regularly monitored and sophis ca on are expensive programmes presents no major challenges. and need to be supported by sound export poten al; un l processors have access to EU All but two of the nineteen processors markets they will be reluctant to invest in is opera ng at sustainable capacity and developing products that they cannot yet sell. producing products that are readily accepted by the local market, which forms at least Overall conclusion 90 percent of their overall market. It is clear from the visits undertaken that the Bosnia and Herzegovina’s dairy industry has dairy and meat processing industries are in responded well considering the general lack suffi ciently good order to face EU accession of government support in terms of legisla on when it comes, with the most notable weak and control. Private ini a ves have forged a point being premises for the slaughter of red fl ourishing processing sector, concentra ng meat.

91 92 5. Government policy for the sector This chapter reviews the policy environment 5.2 Strategies in force at state and for livestock produc on, processing, en ty level marke ng and trade. . Sec on 5.1 briefl y outlines the hierarchy of This sec on provides a summary of the policy-making structures in the country. strategic documents governing all of agriculture and rural development at the . Sec on 5.2 summarizes the strategies and state, en ty and Brčko District levels, and has planning documents currently opera ng been prepared as common background for at state level and in the en es and Brčko each of the sector studies. District (common text for all sector studies). . Sec on 5.3 reviews support policies for the 5.2.1 State level strategy livestock sector, as implemented by the The principal strategic and planning various levels of government. documents for agriculture and rural . Sec on 5.4 covers trade policy for livestock development at the state level are: and livestock products. . “Strategic Plan for the Harmoniza on of . Sec on 5.5 looks at regula on and control Agriculture, Food and Rural Development” of the livestock sector, throughout the . “Harmoniza on Opera onal Programme: marke ng chain. 2008–2011” (agriculture and rural . Sec on 5.6 presents overall conclusions on development) strategy, trade policy, support policy and . “Dra Development Strategy: 2008–2013” regula on. (whole economy) 5.1 Policy-making structures . “Social Inclusion Strategy: 2008–2013” (whole economy) Within Bosnia and Herzegovina, policy aff ec ng agriculture is set at up to four In addi on, the “Mid-term Development diff erent levels: Strategy: 2004–2007” (English tle: “Poverty . State level, where agriculture and rural Reduc on Strategy”) played a strategic role development fall within the competence of up to 2007 but is no longer in force. At the the Ministry of Foreign Trade and Economic beginning of 2009 prepara on began of a Rela ons (MoFTER). new BiH development and social exclusion strategy for the period 2010–2014; a dra . En ty and Brčko District level, within the version has been available since 2010 on the respec ve ministry or department of Web page of the “Directorate for Economic agriculture. Planning” of the BiH Council of Ministers,35 . Canton level, for the Federa on of Bosnia but has not yet been approved. and Herzegovina only. . Municipal level. Strategic Plan for the Harmoniza on of Agriculture, Food and Rural Development Detailed strategies for agriculture and rural development exist mainly at the top two The “Strategic Plan of BiH for the levels (state and en ty), whilst direct support Harmoniza on of Agriculture, Food and Rural to livestock producers can be found at each Development” was adopted in January 2009, of the three lower levels (en ty, canton and together with a “Harmoniza on Opera onal municipality). Programme” for the period 2008–2011,

35 h p://www.dep.gov.ba/razvojni_dokumen /razvojna_strategija/Archive.aspx?template_id=71&pageIndex=1

93 with the objec ves of improving the . Priority Area 3: Support primary produc on compe veness of the agricultural and food with direct farm support measures to processing sectors, and harmonizing and gradually align between en es and with implemen ng rural development measures EU mechanisms. throughout the country. . Priority Area 4: Increase compe veness It is intended to provide a pla orm for the of the agri-food sector of BiH through introduc on of pre-IPARD ac ons to be indirect support measures for produc on, undertaken from 2008 onwards, allowing the processing and trade. founda ons to be in place by 2011 for receipt . Priority Area 5: Protect the rural of EU rural development funds. Further, the environment of BiH through support for Strategic Plan provides a framework within agrienvironmental programmes. which essen al public sector reforms can be . Priority Area 6: Diversify rural ac vi es and introduced to strengthen the coordina on improve the quality of life in rural areas. and management of the sector, enhance the role and focus of execu ve agencies Medium-term Development Strategy for responsible for food safety, veterinary BiH: 2004–2007 (revised document) and phytosanitary issues, and accelerate The revised BiH “Mid-term Development legisla ve and ins tu onal reforms to ensure Strategy” for 2004 to 2007 makes reference gradual compliance with interna onal to the strengthening of ins tu ons in the standards. agriculture sector and to suppor ng the The objec ves of all ac ons defi ned in these eff ec veness of exis ng subsidy systems, as well documents are to: as to redirec on of support measures in line with a. Gradually harmonize sector policies agriculture and rural development priori es. and mechanisms at state, en ty and This has resulted in rural development sector canton levels both within BiH and with strategies at the en ty level, and increased the EU, specifi cally including gradual en ty level funding from 2007. alignment with the EU’s IPARD regula on Harmoniza on Opera onal Programme: (EC Regula on 1085/2005, Ar cle 172) 2008–2011 and its implemen ng regula on (EC Regula on 718/2007); The “Harmoniza on Opera onal Programme” b. Progressively establish appropriate provides a detailed ac on plan for state ins tu onal structures, capaci es, level implementa on of the BiH “Strategic systems and procedures at state level to Plan for Harmoniza on of Agriculture, Food coordinate and guide the management and Rural Development”. The measures of pre-accession harmoniza on have been developed taking full account prepara ons and gradual adop on of the of the ac ons defi ned in the BiH “Mid-term agricultural acquis communautaire. Development Strategy”, most of which have either been par ally implemented or not yet To achieve these objec ves, implementa on implemented. Ac ons in specifi c technical of the strategy will focus on six Priority Areas: areas such as veterinary and phytosanitary . Priority Area 1: Establish the required control have been revised and updated in func onal ins tu onal capacity, consulta on with the relevant state agencies. coordina on and implementa on BiH Development Strategy: 2008–2013 mechanisms at all levels. (dra ) and Social Inclusion Strategy . Priority Area 2: Enhance the quality and safety of domes c products with a A dra BiH “Development Strategy” for compe ve advantage in produc on, 2008 to 2013 has been prepared, along processing and trade. with a “Social Inclusion Strategy”. The BiH

94 “Directorate for Economic Planning” (a body . Construc on and maintenance of rural of the Council of Ministers) is responsible infrastructure; for coordina on of development of these . Protec on and conserva on of natural and economy-wide strategies, which have been cultural-historical heritage in rural areas; submi ed to the adop on procedure. Ac on . Diversifi ca on of agricultural and non- plans for BiH, en es and Brčko District have agricultural ac vi es in rural communi es; also been developed. . Support to the establishment of all forms of The focus of the “BiH Development Strategy” micro-, small- and medium-sized enterprises is divided into fi ve strategic goals: in rural areas; and . Compe on . Development of agro- and rural tourism in . Macro-economic stability rural areas. . Employment In order to achieve these goals, the BiH . Sustainable development Development Strategy defi nes the following . EU integra on priori es and measures: . The document is based on “scanning” of all Priority 1. Establishment of a func onal adopted strategies within BiH, from the macro ins tu onal capacity for agriculture and to the micro level and on “undertaking” goals rural development: arising from the chosen path of EU integra on. • Measure 1. Strengthening of human The strategy addi onally takes on board as- resources in the exis ng ins tu ons yet unrealized goals from the previous “BiH • Measure 2. Establishment of missing Development Strategy: 2004–2007” and ins tu ons in agriculture and rural further issues elaborated by working groups development; composed of representa ves from the state, • Measure 3. Harmoniza on of the en ty and Brčko District levels, together with agriculture and rural development sector social partners, civil society and the academic with the EU. community. . Priority 2. Improvement of the compe on Within its overall goals for social and economic in produc on, processing and trade of development, the BiH Development Strategy domes c agricultural products along with states that rural development in the coming raising its quality and safety: period should be focused on: • Measure 1. Inves ng in agricultural . Building human resources in rural areas proper es and organiza ons, and and improving their informa on, skills and inves ng in moderniza on of exis ng knowledge; and construc on of new capaci es for . Improvement of produc on infrastructure processing and fi nishing of agricultural and infrastructure for the purchase of products; agricultural produce in rural areas; • Measure 2. Organiza on of farming land; . Improving the quality and safety of • Measure 3. Establishment and improvement agricultural and food products in line with of coopera on in the produc on and EU standards; processing of agricultural products; . Sustainable management of agricultural • Measure 4. Support to the introduc on and forest land, livestock and, generally, of of quality and control systems; living condi ons in rural areas; • Measure 5. Support to organiza ons of . Improving the quality and accessibility of agriculture producers; public services for the rural popula on; • Measure 6. Fishing industry: policy for . Improvement of the posi on of women in improvement of domes c and export rural areas; markets.

95 . Priority 3. Protec on of nature and ra onal 4. Development of agriculture market and management of natural resources: suppor ng the leasing of agricultural land. • Measure 1. Support to environmental 5. Providing a suffi cient quan ty of good protec on measures; quality food to consumers at reasonable • Measure 2. Support to biodiversity prices. protec on and sustainable use of gene c 6. Harmoniza on of the protec on of resources. animals and plants. Support for biological . Priority 4. Improvement of living condi ons and ecological produc on. and introduc on of greater diversity of 7. Establishment and accredita on income-genera on in the rural economy: of reference laboratories. Enabling • Measure 1. Improvement of rural standardiza on and cer fi ca on of infrastructure; agricultural products, and establishing a system of guarantees and quality • Measure 2. Support to the development of rural, par cularly women’s, management. Building new facili es for entrepreneurship; food processing. 8. Establishing unifi ed management of • Measure 3. Support to the produc on of specifi c geographically brand-named agriculture and rural development at the products; state level. Establishing a single economic space and suppor ng the market for • Measure 4. Promo on of rural tourism; agricultural products throughout BiH. • Measure 5. Support to rural and especially 9. Ensuring the par cipa on of agricultural women entrepreneurs; products in interna onal markets under • Measure 6. Promo on of rural tourism. fair condi ons. Prepara on for WTO 5.2.2 Strategy within the Federa on of and EU membership. Elabora on of support programmes and prepara on for Bosnia and Herzegovina implementa on of the Paying Agency for The Federa on of Bosnia and Herzegovina disbursement of EU funds. (FBiH) is in the process of implemen ng its 10. Suppor ng the export of agricultural “Midterm Strategy for Agriculture Sector and processed food products. Carrying Development: 2006–2010”, which was out external media campaigns to a ract adopted in 2007 along with its Ac on Plan. tourists to BiH. The specifi c goals and priori es iden fi ed in 11. Protec on and ra onal use of natural the Strategy are: resources. Support to sustainable 1. Con nua on with rehabilita on of the economic use of agriculture and forest sector from the consequences of war. land and waters. Clearance of minefi elds and restora on of land to its previous purpose. Suppor ng The measures envisaged by the Strategy and popula on returns and improving the Ac on Plan will seek to: quality of life in rural areas. 1. Defi ne the exis ng situa on of rural 2. Establishment of sustainable areas (economic, infrastructure and development of agriculture and of the food demographic specifi cs); processing industry, and its profi tability 2. Adopt the “Rural Development and compe veness. Strengthening of Programme”; coopera ves, enterprises, and other 3. Defi ne economically less-favoured areas producers’ organiza ons. (remote areas and less-favoured areas) 3. Legal establishment of agricultural and set out support measures for them; ins tu ons and clear defi ni on of farms 4. Establish credit and micro-fi nance and other subjects in the agriculture sector. systems, while giving special allowances

96 for the development of agriculture, 2. Ensure op mal use of agrarian the food industry and other forms of resources (land, water, forests, gene c employment for the rural popula on poten al, etc.) and increase produc vity outside of agriculture; and compe veness, with improved 5. Develop and apply a system of educa on technology, environmental protec on for the rural popula on and establish and sustainable development; advisory and extension services to carry 3. Achieve balanced integrated out these ac vi es; development, agrarian, rural and regional, 6. Develop a strategy for se ng up gender whilst strengthening produc vity and equality through the strengthening of the economic protec on of market-oriented role of woman in rural society; producers, preven ng depopula on and 7. Establish a system of support to women achieving socio-economic revitaliza on entrepreneurs; of rural, and par cularly upland, areas; 8. Develop a strategy for the protec on of 4. Maintain a stable market of agricultural women’s and children’s health and for and food products, and a supply promo on of their educa on; of food whose quantity, structure, prices and quality is harmonized with 9. Develop a programme for preserva on nutritional needs and the level of and sustainable u liza on of autochthonic consumer purchasing power, with a fruit resources; gradual decrease in the share of food 10. Defi ne the set of tradi onal products expenditure within the structure of with the poten al to become products family budgets; with protected origin, cra products and 5. Increase exports with achievement of a souvenirs; higher level of foreign trade balance in 11. Develop a programme for development of agricultural and food industry products, new products (from the list of tradi onal based on produc vity, quality, harmonized products); legisla on (with EU and WTO) and an 12. Intensify the implementa on of the equivalent level of internal incen ves prescribed measures for protec on and and external consumer protec on; recovery from natural and other disasters. 6. Implement ins tu onal, material, The FBiH “Opera onal Programme for human, and technological improvement Agriculture, Food and Rural Development” of agriculture with RS’s involvement in is currently under dra ing procedure. It will regional, European and world integra on include ac vi es related to establishment of the processes. Paying Agency and implementa on of IPARD. This document was amended slightly in 5.2.3 Strategy within Republika Srpska accordance with the entering into force of the RS “Rural Development Strategic Plan The Republika Srpska has an “Agricultural 2009–15”, adopted in 2009, which is now Development Strategy un l 2015” approved being implemented. This plan sets out three by its parliament in 2006. It is the fi rst, and strategic goals, 16 specifi c goals, 54 measures s ll the main, strategic document addressing and 161 submeasures. objec ves and other issues related to The strategic goals for rural development in agriculture in this en ty. It defi nes the long- RS are defi ned as: term objec ves of agricultural development in RS as follows: 1. Improvement of compe veness in 1. Increase the scope and adjust the agriculture and forestry; structures of agro-industrial produc on 2. Preserva on of nature and ra onal in order to achieve food self-suffi ciency; management of natural resources;

97 3. Improvement of living condi ons and 3. Develop organic produc on, and introduc on of diversifi ca on of income apply principles of preserva on of the in the rural economy. environment; Specifi c goals or priori es foreseen by the 4. Improve the use and protec on of gene c strategy are: resources in agriculture; 1. Farm investments; 5. Support the moderniza on and 2. Investment in processing and marke ng introduc on of European and world of agricultural products; standards in agricultural produc on and processing; 3. Support to organiza ons of agriculture producers and private forest owners; 6. Improve professional educa on and skills of producers in agriculture and the food 4. Improvement of human resources in processing industry; rural areas; 7. Develop ver cal and horizontal 5. Financial support to rural areas; integra on with strengthening of market 6. Sustainable management of natural infrastructure; resources in rural areas; 8. Develop fi nancial sources for the 7. Sustainable forest management; agriculture sector; 8. Sustainable management of hun ng and 9. Promote rural development; fi shing resources; 10. Improve the legal framework of 9. Sustainable management of village areas; agriculture in BD; 10. Construc on and maintenance of village 11. Support exis ng and establish new infrastructure; ins tu ons to support agriculture; 11. Improvement of access to public services 12. Adapt agrarian policy to good European for the rural popula on; prac ce and to the real needs of the 12. Research and protec on of natural and sector; cultural-historical heritage in rural areas; 13. Increase fi nancial support to the 13. Diversifi ca on of non-agricultural and agriculture sector. agricultural ac vi es in villages; The measures proposed to support rural 14. Establishment of micro-, small- and development are: medium-sized enterprises in villages; . Establishment of Local Ac on Groups and 15. Improvement and development of rural development of capaci es for ini a on of tourism services; rural development; 16. Support to local rural development . Rehabilita on of exis ng and construc on ini a ves. of new pasture-access roads; 5.2.4 Strategy within Brčko District . Construc on of systems for carrying away waste from rural areas; Brčko District (BD) has prepared its “Strategy . Improvement of the quality of the sewage for the Development of Agriculture, Food system in BD; and Rural Development: 2009–2013” and . Crea on of movable social infrastructure in accompanying “Ac on Plan”, which are rural areas of BD; currently in the adop on procedure. . Support to the establishment of small- and According to the strategy, its strategic and medium-sized enterprises in rural areas; opera onal goals are to: . Support to the development of non- 1. Intensify crop and animal produc on; conven onal agriculture produc on; 2. Support revitaliza on of the food . Support to the development of processing industry; complementary ac vi es on farms;

98 . Support to the development of agro- these laudable aims are to be achieved, tourism; and it is here that the policies actually . Support to preserva on of the environment implemented for the livestock sector give through raising awareness of the local more insight into strategy in ac on. popula on; 5.3 Domes c support policy for the . Promo on of the natural and cultural- historical heritage of BD; livestock sector . Support to preserva on of tradi onal cra s; Only foreign trade policy is established at the . Support to restora on of forest resources. state level, and so it is the support policies delivered within each en ty that have the 5.2.5 Conclusions on the strategic most direct eﬀ ect on agricultural producers. planning framework 5.3.1 Livestock support in Federa on of The BiH state, its two en es and Brčko Bosnia and Herzegovina District have all now dra ed strategic planning documents for agriculture and Direct support to livestock producers in the rural development along the lines of the Federa on is delivered partly by the en ty EU programming process. The goals and level government and partly by the cantons, priori es set out are comprehensive and with the exact nature of the support schemes ambi ous, perhaps appearing more of a varying from canton to canton. The following “wish-list” than a targeted strategy, and table summarizes the kinds of livestock create space for the implementa on of subsidy36 paid in 2008 (the latest year for a very wide range of support measures which detailed data were available for all and policies. What is less clear from these cantons and at en ty level), together with the strategic level documents is exactly how number of cantons applying each:

36 Subsidies were classiﬁ ed into approximate types based on their tle in the supplied dataset. The term “Headage payment” is used for any subsidy that appears to be related to the number of animals kept, rather than the number bought (= “Input subsidy”) or the amount of product sold (= “Output subsidy”).

99 Table 5.1: Types of livestock subsidy paid in 2008 and the number of cantons applying each subsidy

ENTITY CANTON TOTAL Species and form of support Subsidy Subsidy Num. cantons Total subsidy General/undefi ned 119,000 KM 119,000 KM Input subsidy Livestock selec on 119,000 KM 2 119,000 KM Ca le 19,187,000 KM 7,429,000 KM 26,616,000 KM Input subsidy Ar fi cial insemina on 112,000 KM 1 112,000 KM In-calf heifers 140,000 KM 1 140,000 KM Milk card 204,000 KM 1 204,000 KM Livestock selec on 2,188,000 KM 5 2,188,000 KM Headage payment Beef fa ening 2,141,000 KM 1,087,000 KM 5 3,229,000 KM Cows 229,000 KM 2 229,000 KM In-calf heifers 1,141,000 KM 402,000 KM 1 1,543,000 KM Milking cows 652,000 KM 1 652,000 KM Suckler cows 241,000 KM 241,000 KM Output subsidy Milk 15,378,000 KM 2,260,000 KM 7 17,638,000 KM Other subsidy Milk processing 155,000 KM 1 155,000 KM Market support Milk 286,000 KM 286,000 KM Sheep and goats 1,032,000 KM 5,000 KM 1,037,000 KM Headage payment Basic fl ock 967,000 KM 967,000 KM Undefi ned 2,000 KM 1 2,000 KM Output subsidy Cheese 2,000 KM 1 2,000 KM Milk 65,000 KM 65,000 KM Sheep (where subsidy excluded goats) 146,000 KM 981,000 KM 1,127,000 KM Headage payment Pregnant females 146,000 KM 146,000 KM Breeding ewes 108,000 KM 1 108,000 KM Undefi ned 873,000 KM 1 873,000 KM Pigs 1,812,000 KM 818,000 KM 2,630,000 KM Input subsidy Livestock selec on 83,000 KM 1 83,000 KM Headage payment

100 ENTITY CANTON TOTAL Species and form of support Subsidy Subsidy Num. cantons Total subsidy Breeding sows 106,000 KM 1 106,000 KM Fa ening 1,710,000 KM 570,000 KM 2 2,280,000 KM In-pig gilts 102,000 KM 102,000 KM Sows 58,000 KM 2 58,000 KM Poultry 345,000 KM 1,914,000 KM 2,259,000 KM Input subsidy Support to organizers of broiler produc on 101,000 KM 1 101,000 KM Headage payment Broilers 768,000 KM 2 768,000 KM Laying hens 142,000 KM 2 142,000 KM Parent stock 140,000 KM 140,000 KM Point-of-lay pullets 206,000 KM 622,000 KM 4 828,000 KM Output subsidy Broilers 125,000 KM 1 125,000 KM Day-old chicks 49,000 KM 1 49,000 KM Eggs 107,000 KM 2 107,000 KM Bees 1,247,000 KM 375,000 KM 1,622,000 KM Input subsidy Beekeeping associa ons 1,247,000 KM 155,000 KM 1 1,402,000 KM Health protec on 29,000 KM 1 29,000 KM Output subsidy Honey 191,000 KM 5 191,000 KM Total subsidies 23,770,000 KM 11,640,000 KM 35,410,000 KM (67%) (33%) (100%) Source: Data provided by FBiH Ministry of Agriculture via MoFTER

This shows that two-thirds of total support produc on (output) subsidies, and other was provided by the en ty level government, subsidies. The only form of market interven on and one-third by the cantons. The same kinds indicated by the data was interven on of support crop up in mul ple cantons, each purchase of milk, which was carried out at takes a slightly diﬀ erent approach. The most en ty level in three years out of six; this has widely applied forms of support are milk been included within “other subsidies”. subsidy, applied both at en ty level and by 7 of the 10 cantons, and livestock selec on, The breakdown of funds by support measure which was paid only at canton level, but again and target species is shown in the Table 5.2. in 7 out of the 10 cantons. These are followed . Just over half (51 percent) of support is by subsidies for fa ening beef ca le (applied produc on (output) subsidies, of which the at en ty level and in half of the cantons) and bulk is milk subsidy; for honey produc on (also applied in half of . 35 percent of subsidies are paid per head of the cantons, but not at en ty level). livestock or beehive kept; The subsidies can generally be grouped into . 12 percent of funds go for input subsidies, four kinds: input subsidies, headage payments, predominantly for livestock selec on.

101 Source: Data provided by FBiH Ministry of Agriculture via MoFTER TOTAL es14100K .%00 9,0 M05 .%16200K 4.6% 1,622,000 KM 7.4% 0.0% 2,630,000 KM 6.4% 0.0% 6.1% 2,259,000 KM 2,164,000 KM 0.0% 0.0% 0.5% 191,000 KM 0.0% 0.0% 0.8% 0.2% 281,000 KM 67,000 KM 5.3% 7.2% 5.9% 4.0% 1,877,000 KM 2,546,000 KM 2,097,000 KM 0.3% 1,431,000 KM 0.2% 0.0% 101,000 KM 83,000 KM General/unde Bees Poultry Pigs Sheep/goats Ca Species l ,4,0 M75 ,9,0 M1.%1,3,0 M4.%4100K .%2,1,0 M75.2% 26,616,000 KM 1.2% 441,000 KM 49.8% 17,638,000 KM 16.6% 5,894,000 KM 7.5% 2,643,000 KM le ﬁ nd1900K .%00 .%00 1,0 M0.3% 119,000 KM 0.0% 0.0% 0.0% 0.3% 119,000 KM ned ,7,0 M1.%1,1,0 M3.%1,7,0 M5.%4100K .%3,1,0 M100.0% 35,410,000 KM 1.2% 441,000 KM 51.3% 18,177,000 KM 35.1% 12,414,000 KM 12.4% 4,378,000 KM mutSaeAon hr mutSaeAon hr mutShare Amount Share Amount Share Amount Share Amount Share Amount nu usd edg amn uptsbiyOhrsbiyTOTAL Other subsidy Output subsidy Headage payment Input subsidy Table 5.2: Livestock subsidies paid by FBiH en ty and cantons in 2008

102 Graph 5.1: Livestock subsidies paid by FBiH cantons

Source: Data provided by FBiH Ministry of Agriculture via MoFTER

In terms of species, ca le take 75 percent of Data on en ty level support were only all support, followed by pigs with 7 percent available from 2006, though extending up to and then sheep/goats and poultry, each 2010, and are shown in the Graph 5.2. with 6 percent respec vely. Beekeeping (addressed under diversiﬁ ca on rather than In 2006, the milk subsidy data do not in this study), received almost 5 percent of dis nguish between cows’ milk and that from total livestock subsidies. sheep and goats, but these data are separated in all subsequent years. The Graph 5.1 shows the drama c rise in cantonal livestock support payments in recent The increase in funding has not been as years, rising from almost nothing in 2002 to consistent or drama c as that at the cantonal nearly 12 million KM in 2008. level, but is s ll very signiﬁ cant: from 2006 to 2010 total livestock support almost doubled It is understood that some municipali es from 15.9 to 31.2 million KM, an absolute also pay agricultural subsidies, but no increase of over 14 million KM, which is more comprehensive data were available. than the en re support paid by cantons.

Graph 5.2: Livestock subsidies paid by FBiH en ty government

Source: Data provided by FBiH Ministry of Agriculture via MoFTER

103 5.3.2 Livestock support in Republika animal vaccina on and compensa on for Srpska slaughter of aﬀ ected animals). Incen ves for breeding animals (heifers, ewes, etc.) As Republika Srpska is not divided into have decreased signiﬁ cantly since 2008 as cantons, the main source of agricultural payment rates were reduced. Support for support is the en ty ministry of agriculture. meat produc on has remained rela vely Overall subsidies for agriculture and rural stable at between 1.4 and 3.8 million KM. development in Republika Srpska grew Subsidies have been paid for beekeeping from the end of the war un l 2008, when since 2007. they reached a maximum of 85 million KM. Since 2008 subsidies have started slowly The overall development of RS livestock decreasing. subsidies over recent years is shown in the Graph 5.4. Livestock subsidies make up between 31 percent and 48 percent of total agricultural . The principal forms of direct livestock subsidies. They also peaked in 2008 (at close support opera ng in 2011 are: to half of total subsidies), as shown in the . Milk subsidy, per litre delivered to registered Graph 5.3. dairies, with the subsidy rate depending on the milk quality band, as determined by the Livestock subsidies remain dominated by milk tes ng laboratory in Banja Luka. direct payments in which the amount is linked to the quan ty of milk or meat produced . Subsidy on quality breeding heifers. and sold. This is a rather old fashioned Subsidy on beef fa ening. model of delivering support to agriculture and the pressure to adapt this model has . The rates of milk subsidy paid in October recently become more urgent in line with the 2010 were: aspira on of Bosnia and Herzegovina to join . Extra (i.e. EU) class: 0.22 KM/litre both WTO and the EU. . Class 1: 0.20 KM/litre The largest element of livestock subsidies is . Class 2: 0.18 KM/litre the premia for milk produc on, followed by . Class 3: 0.14 KM/litre support for animal health protec on (primarily . Class 4: 0.10 KM/litre

Graph 5.3: Livestock subsidies as a percentage of total agricultural subsidies

104 Graph 5.4: Livestock subsidies paid by the Republika Srpska

Source: Banja Luka Faculty of Agriculture

The ministry’s policy is to maintain or increase size, as did the amount of subsidy received. the subsidy on higher quality milk, and to The details of the subsidy scheme vary from progressively reduce or withdraw it en rely place to place and species to species, but for milk that is furthest from EU standards. o en there are eligibility criteria which have the eff ect of tending to exclude smaller 5.3.3 Livestock support in Brčko District farms. No informa on was available on livestock . The amounts of support received per farm, support policies in Brčko District, which was if any, vary widely, from a few hundred KM not included in the Project Farm Survey. to several tens of thousands of KM. Since almost all forms of subsidy are connected to 5.3.4 Average support payments the number of animals bought, kept or sold, received or to quan es of milk or eggs sold, it is large farms that receive the higher amounts The Table 5.3 presents a preliminary analysis of support. of the actual share of farms of each type that . Within the limits of error of this survey, received subsidies in each en ty, and the there do not appear to be big diff erences average amount of subsidy received, both between the amount of support given in per supported farm and per farm in type. It FBiH and in RS. should be noted that these are unweighted data from quite small samples, and so serve 5.4 Trade policy for livestock and only to give a general picture. livestock products The main points to emerge from the table In terms of interna onal agreements, Bosnia are: and Herzegovina has a very liberal trade . The smallest farms, in the “Household policy, with no export subsidies and with sector”, generally did not receive any low levels of tariff s in line with its WTO and subsidy at all. Stabilisa on and Associa on Agreement (SAA) . Most poultry farms received some form of commitments. The most important trading subsidy, as did just under half of sheep and partners are other CEFTA members, who pig farms. For ca le, the propor on of farms trade most products between themselves receiving a subsidy increased with farm with extremely low or zero du es.

105 Source: Project Farm Survey i reig omril5%130K 5 M6 ,0 M111 KM 2,000 KM 150 KM 408 KM 2,375 KM 6% 1,200 KM 2,450 KM 2,350 KM 4,750 KM 1,010 KM 435 KM 190 KM 4,487 KM 37,003 KM 2,350 KM 650 KM 13% 17% 1,515 KM 50% 17,947 KM 869 KM 380 KM 74,007 KM 1,300 KM 374 KM 2,269 KM 100% 778 KM 67% 25% 131 KM 50% 50% 50% 3,403 KM 749 KM 50% 889 KM Laying hens, large commercial 1,627 KM Broiler hens, large commercial 1,050 KM 48,225 KM 325 KM 133 KM Poultry 67% Pig fa 50% 3,255 KM 88% 64,300 KM Pig breeding-fa 541 KM Pig breeding, commercial 13% 333 KM Pigs Sheep breeding, large commercial 50% 75% Sheep breeding, medium commercial Sheep 60% 40% Beef fa Beef breeding Dairy-beef farm Dairy, corporate dairy farm Dairy, large dairy farm Dairy, medium dairy farm Dairy, small dairy farm Ca le eig omril2%1,6 M2,717 KM 10,867 KM 25% commercial ening, eig ag 0 ,0 M300K 5 500K 6,250 KM 25,000 KM 25% 3,000 KM 6,000 KM 50% large ening, Species and Farm type eig omril5%248K 1,204 KM 2,408 KM 50% commercial ening, receiving subsidy Share of farms Table 5.3: Subsidies received farms on surveyed supported farm Subsidy per BHRS FBiH Average subsidy per farm in type receiving subsidy Share of farms supported farm Subsidy per Average subsidy per farm in type

106 However, domes c meat prices appear to Animal Iden fi ca on, located in Banja Luka, be markedly above import prices (by up to and for the Veterinary Border Inspectors 30 percent, according to some processors at all of the country’s external borders. interviewed), indica ng that some barriers Beyond this federal level, responsibility for to trade do func on. The answer seems to veterinary ma ers is split between mul ple lie within a requirement that processors organiza ons: incorporate a minimum percentage of . The FBiH Ministry for Agriculture, Forestry domes cally produced meat (presumably in and Water Management takes the lead for order to obtain a BiH Cer fi cate of Origin), veterinary ma ers but has no veterinary which in eff ect gives a signifi cant level of inspectors of its own, as they are located protec on to the domes c industry. within the general Federa on Administra on Some commentators have observed (and for Inspec on Aff airs. Below this, each Customs data confi rm) that much of the canton has its own ministry of agriculture imported meat is frozen, which would be one or, in one case, ministry of economy; two of reason for its rela ve cheapness compared these have their own veterinary inspectors to domes cally produced meat; some also whilst in the other eight cantons these allege that the imports are of lower quality. are also located with a general Cantonal However, most meat processing plants can Administra on for Inspec on Aff airs. achieve their desired product quality from . The RS Ministry for Agriculture, Forestry and frozen raw material and did not report Water Management includes a Veterinary any problems with the quality or supply Sector, but again the veterinary inspectors of imported materials, whilst they found are based within a general Republic local meat to be of indiff erent quality and Administra on for Inspec on Aff airs and hard to obtain in the consistent quan es below them each municipality has its own they require. As noted in sec on 4.4.8, raw inspec on department. material represents up to 60 percent of . The BD Department for Agriculture, Forestry meat processors’ opera ng cost and so has and Water Management includes some a very big impact on profi tability; a policy of veterinarians within its Veterinary Sub- obliging processors to use more domes cally department, but the Offi ce of the Mayor produced meat would have the economic houses most of the inspectors, including eff ect of taxing the processing industry and veterinary inspectors. subsidizing primary producers. The result of this is that there is no clear chain 5.5 Regula on and control of the of command and the BiH Chief Veterinary livestock sector37 Offi ce has no power to suspend or close an establishment that fails to comply with As in the EU, lead responsibility for regula on veterinary and hygiene standards. Although of livestock produc on and processing lies the BiH Veterinary Offi ce is responsible with the veterinary authori es. The Veterinary for giving “guarantees” of the sa sfactory Offi ce of Bosnia and Herzegovina was created nature of livestock products for export, the in 2000 to func on as the country’s “Central European Commission’s Directorate General Competent Authority”, and represents BiH for Health and Consumers (DG SANCO) and at the OIE (World Organisa on for Animal Food and Veterinary Offi ce (FVO) remain to Health). The BiH Veterinary Offi ce, with its be convinced and have so far approved only headquarters in Sarajevo, has a total of 75 four establishments for export to the EU, staff and is responsible for the Agency for all of them dealing with fi sh. An applica on

37 Most of the informa on in this sec on was supplied by the Veterinary Agency in Sarajevo, and reﬂ ects the situa on in April 2011.

107 is in progress to gain approval for exports of Veterinary control in Brčko District honey (for which the main issue is usually The Chief Veterinary Offi cer (head of the pes cide residues, rather than control of Veterinary Sub-department) is also the head establishments). Thus far, BiH has no approval of inspec on services throughout Brčko to export live animals, meat, meat products, District. milk or milk products to the EU – meaning to any of the current 27 Member States and Laboratory services also to Croa a a er its accession.38 The BiH There are 14 func oning control laboratories Veterinary Offi ce would like to obtain approval within BiH, some of them dealing with for the export of milk, dairy products and food and veterinary ma ers, but they are poultry meat, but it is far from certain that such registered at various diff erent levels and there approval will be granted whilst the current is no central reference laboratory for either complex administra ve structure prevails. BiH or the en es. The Veterinary Ins tute State level veterinary control at Banja Luka and the laboratory in Bihać are among the more advanced, but no ins tu on In addi on to the roles discussed above within BiH has ISO 17025 cer fi ca on for (export cer fi ca on with regard to the EU, residue analysis, so all samples from the veterinary border controls, and animal na onal residue tes ng programme are sent iden fi ca on), there are at present state level outside the country. ini a ves covering: . Control of viral diseases of fi sh; Legisla on . Ac on against avian infl uenza; Veterinary legisla on at the state level is . Brucellosis vaccina on. prepared by working groups convened by the BiH Veterinary Offi ce, with representa ves There is no state level con ngency fund from the en es. All dra legisla on must be to deal with a major outbreak of epizoo c approved by both en es and Brčko District disease. before it can be submi ed for state level Veterinary control in the Federa on approval by the Ministry of Foreign Trade and Economic Rela ons (MoFTER), the Council of Establishments wishing to export to non-EU Ministers, and/or the Parliament, depending countries in the region must be registered on the form of legisla on. with the Federa on Ministry of Agriculture, whilst those wishing to trade within the Rendering of animal waste country must register with the relevant offi ce Before the war there was one large rendering in their local canton. plant based in Brčko, but it is no longer Veterinary control in Republika Srpska func onal, and there are now just a few small private plants serving local customers. The Chief Veterinary Offi cer within the RS Na onal legisla on has been prepared on the Ministry for Agriculture, Forestry and Water subject but funding is needed to construct Management is responsible for registering one or two large-scale rendering plants, with all establishments, whether trading locally or Instrument for Pre-Accession Assistance (IPA) regionally. viewed as a poten al source.

38 Interes ngly, both Customs data and stakeholder interviews indicate some export of milk and dairy products, poultry meat and red meat products to the EU, though no exports of live animals or red meat. Generally speaking, the highest veterinary risk is carried by live animals, followed by fresh meat and fresh milk; once meat has been processed into ham, sausages, etc. or milk into cheese or yoghurt, many of the more serious disease organisms are likely to have been destroyed. It was not clear whether these exports had been processed to such an extent that they are no longer considered a veterinary health risk, or whether a crea ve approach to expor ng was being used.

108 Animal iden fi ca on upgrade the sector – livestock selec on, ar fi cial insemina on, health protec on of The Agency for Animal Iden fi ca on has so bees, and support to beekeeping associa ons far introduced an EU-compliant system for – with the other 90 percent being mainly iden fi ca on and registra on of bovines. As input subsidies, headage payments and in many countries of the region, the system output subsidies. In RS, the largest share of is reasonably successful at ensuring that expenditure is on milk subsidy, followed by newborn calves are ear-tagged and entered “public good” health protec on measures onto the system (except for calves that are of preventa ve vaccina on and disease slaughtered on the holding before tagging eradica on (in previous years input subsidies can take place), but control of movements and headage payments played a larger role, and repor ng of deaths and slaughters are but have recently been reduced for budgetary weak, resul ng in the gradual accumula on reasons). of “ghost cows” in the database. Expenditure on input subsidies for quality 5.6 Conclusions on government policy breeding animals is a debatable point: and regula on improving the na onal fl ocks and herds is clearly of strategic benefi t to the sector, Strategy but it is hard to judge to what extent such A number of strategy documents are in place, subsidies genuinely cause farms to purchase though some mes appearing as more of a be er livestock, and to what extent they just “wish list” than an opera onal strategy. A provide a price subsidy for the same animals number of stakeholders referred to the lack of that would have been bought anyway. a clear vision for the sector, so there may be Overall it seems that most of the budget some weak points in the chain between top is being used to help farmers stay in the level strategy documents and implementa on same place, rather than to move the sector at the level of farmers and processors. forwards to higher levels of effi ciency and Trade policy greater readiness to enter the EU. Trade policy is managed at the state level; Regula on in principle there is a very liberal trading In an EU-harmonized system, the most environment, though the signifi cant price signifi cant regulatory role in the livestock diff eren als between imported and domes c sector is played by the veterinary authori es, meats indicate that there may be some non- and this is an area that came in for tariff barriers at work. considerable cri cism during consulta on Support policy with stakeholders. No ma er how good an individual dairy or meat processor may Direct support policies are set and be, they cannot export to the EU un l BiH implemented by the en es and, in FBiH, by has obtained the necessary country level the Cantons. approvals from the European Commission. So far this approval is en rely lacking in the In line with most other countries in the key areas of meat, milk, and meat and dairy region (and similar to many of the policies of products, and the eff ects of this will be felt the former Yugoslavia), most of the livestock very soon through the loss of the major support is related to farm inputs and outputs, Croa an market when Croa a enters the EU. par cularly milk, and rela vely li le is devoted to providing the “public good” services that The underlying weaknesses seem to be mainly are the clear responsibility of government. ins tu onal, and thus the solu ons to them In FBiH, just over 10 percent of all livestock will involve considerable poli cal debate. It is subsidy expenditure is for measures to not the role of this study to propose poli cal

109 or ins tu onal solu ons, but to point out that the people of Bosnia and Herzegovina must solve this problem themselves, and do so as quickly as possible in order for the livestock sector to retain its current markets and con nue developing towards its EU future.

110 6. Markets and trade

This chapter looks at domes c and meat processors, crea ng a large nega ve interna onal trade in milk and dairy products: trade balance in respect of imports. There . Sec on 6.1 gives a brief overview of the are evident improvements in the quality market and main trends in marke ng and and quan ty of processed milk and meat, consump on. especially in diversifi ca on of packaging standards and the range of pack sizes off ered. . Sec on 6.2 discusses the domes c marke ng structures applicable to meat, The meat processing industry also has seen milk and dairy products. progressive development. Most of the former . Sec on 6.3 looks at interna onal trade and state slaughterhouses and meat processing discusses how Croa a’s imminent accession plants simply collapsed in the war, but they to the EU will impact on the BiH livestock have now been replaced by new private sector. enterprises. . Sec on 6.4 presents an overall es mate of As an interes ng contrast to other former the supply balance for the livestock sector Yugoslav republics such as Serbia, the in value terms; this complements the complete destruc on of many processing physical supply balance for meat presented facili es in the war has meant that new in sec on 3.10. entrepreneurs have o en started afresh . Sec on 6.5 discusses the signifi cance of on green-fi eld sites, without the burdens “non-marketed produc on” for markets of outdated equipment and buildings and and trade. the over-manning that so o en hold back . Sec on 6.6 gives an overall summary of development in this region. Many people domes c marke ng, interna onal trade fl ed the country during the confl ict, and and the role of informal produc on and brought back with them not only capital, marke ng within the BiH livestock sector. but also technical and market knowledge gained abroad, including some awareness of 6.1 Overview consumer trends in western Europe. Whilst there are obviously many excep ons to this Bosnia and Herzegovina is a small exporter of generaliza on (e.g. old processing plants s ll eggs, approximately self-suffi cient in poultry func oning, people who remained in Bosnia meat and sheep meat, a minor net importer of throughout the war), it was observed at a pig meat, meat products and off al, and a major number of the plants visited, and stood out as net importer of ca le, milk and dairy products. being markedly diff erent from most countries In fi nancial terms, its overall selfsuffi ciency in in the region. livestock products is es mated at just over 75 percent (see sec on 6.4 below). 6.1.1 Factors underlying the current situa on The domes c market is developing, though rather more slowly than Serbia for example, Domes c commentators tend to a ribute remaining reliant on tradi onal products. Bosnia and Herzegovina’s lack of export A er priva za on of the dairy and meat success in the livestock sector to regulatory processing companies, the market has hurdles in reaching foreign markets, with taken progressive steps forward, as strong par cular obstacles being iden fi ed as the investment in moderniza on and new lack of animal iden fi ca on systems and capaci es of processors enabled increased accredited laboratories for control of products farm milk intake. However, the livestock of animal origin: animal iden fi ca on has sector is s ll underdeveloped and cannot been in place since 2006 for ca le, and the supply even half of the needs of domes c system is only now being extended to small

111 ruminants, whilst BiH does not yet have a as the sudden growth in exports to Lebanon single laboratory accredited for the control of in 2010). During the socialist era a number of dairy and meat products. These are commonly North African countries (including Lebanon, seen as being key reasons why Bosnia and Algeria, Morocco and Libya) were signifi cant Herzegovina is not yet able to export to the foreign trade partners for Yugoslavia’s EU (whilst the opposite trade is fl ourishing), livestock sector; it remains to be seen how and its target market is mainly restricted to the tumultuous events in the region this past neighbouring pre-accession countries. year will aff ect trading rela onships. Whilst these are undeniably two important An alterna ve strategy can be import factors, the EU system of health cer fi ca on subs tu on by domes c products. places increasing emphasis on process Development trends in the BiH poultry meat control in the expor ng country plants, rather market provide a good example, where BiH than on tests of the fi nal product. The main reduced its trade defi cit by increasing domes c restric ons on livestock exports from Bosnia produc on and processing capaci es, and re- and Herzegovina probably come down to two orientated them to the manufacture of more key issues: complex and higher value products. . Whether the EU’s DG SANCO and its Food As discussed extensively in this report, and Veterinary Offi ce really have confi dence livestock produc on in BiH is characterized in the ability of Bosnia and Herzegovina’s by a high degree of informal, small-scale complex and ill-coordinated veterinary produc on and consump on. With very low services to consistently implement EU numbers of animals per farm, the small farms standards and rapidly iden fy and resolve are oriented primarily towards produc on problems when they emerge; of milk and meat for own needs, with the . Whether BiH producers are able to compete occasional sale of temporary surpluses. This on price, quality and marke ng standards structure increases the costs of raw material with dynamic and export-oriented EU collec on and makes it harder to provide a Member States. steady supply to processors, who in response turn to imports as a less expensive and more Once Bosnia and Herzegovina does succeed in consistent source of raw materials. One view developing a compe ve and well-regulated sees this as a vicious circle that progressively livestock sector, specifi c issues such as animal weakens internal marke ng structures and iden fi ca on and laboratory tes ng will be encourages producers to abandon their rela vely easy to solve. produc on; an alterna ve and more posi ve view of the informal sector is presented in However, this desirable situa on has not yet sec on 6.5 at the end of this chapter. been achieved, and for now BiH is largely limited to expor ng its meat and dairy A fi nal issue within the overall picture of products to neighbouring CEFTA countries. livestock trade is the chronic dependence of Un l recently Croa a has had so er Bosnia and Herzegovina on imports to secure requirements than the EU and so has been the quality breeding animals, in part because main des na on for BiH exporters. This has its na onal selec on system is s ll weak now changed with Croa a’s fi nal prepara ons and fragmented. However, eff ec ve gene c for EU accession, and its market has begun selec on depends on having a solid base to be inaccessible for animal products from of rela vely large farms with good record- BiH. Un l Bosnia and Herzegovina manages keeping and consistent high standards of to fulfi l all requirements for export to the EU feeding, management and health care. These it will have to look for alterna ve des na ons condi ons are very far from the current to replace its lost Croa an export market by reality in Bosnia and Herzegovina, and hence expor ng to less demanding countries (such the import of gene c material will con nue

112 to be necessary un l major structural change prices for milk and liquid dairy products, has taken place. which play a par cularly important role in the overall structure of food consump on, 6.2 Domes c marke ng characterized by a high share of consump on of liquid milk products (pasteurized and 6.2.1 Marke ng of milk and dairy UHT milk, yoghurt, sour milk) and rela vely products low importance of non-liquid milk products In the distribu on of milk products to (cheese, milk spreads, bu er). consumers the most important role in Bosnia Consumers’ dietary habits and tastes are the and Herzegovina is played by formal retail ul mate driving force in the food supply chain. outlets. Processed milk and liquid dairy Total demand for milk and milk products is products are mainly distributed through the limited by two factors: popula on and income retail sector, with just a small amount going per capita. Sta s cal data on both are limited, through the catering industry. Several domes c but the fi gures presented in sec on 2.3 of this and foreign retail chains currently operate on report indicate that the popula on is more the BiH market. Among the domes c retailers or less sta c, whilst GDP is growing at an the largest are Tropic, Robot, Merkur, Bingo average of 7.5 percent per year. The infl uence and DP. The most important foreign retailers, of branding and the power of brand loyalty is which originate from Belgium, France, increasing slowly as consumers are subject to Slovenia, and Croa a, are Delhaize, Interex, improved marke ng by processors and more Mercator, Tusand Konzum. In 2011, BiH had imagina ve merchandising from retailers; some 32 hypermarkets, 154 supermarkets and this combines with the growth in GDP to give about 7,000 retail food shops of varying sizes.39 scope to increase the value of dairy product The level of compe on in the retail sector sales, even if not the total volume. has increased slightly in recent years due Changes in consumer spending aff ect the to the arrival of foreign retail chains on the pa ern of dairy product sales, as well as the domes c market. Retailers have recently total quan ty; the following table shows that begun to use their market power to push milk consump on per capita has been slightly dairy processors to give a credit period of decreasing in recent years, and at the same 90 days or more, and this began to feedback me consump on of cheese and bu er has through the supply chain to depress prices been increasing. The diff erence between milk and reduce produc on. Also, higher retailer produc on and milk consump on per capita margins caused rela vely high consumer is the net trade per capita:

Table 6.1: Es ma on of consump on of milk in BiH – 2006 to 2010

2006 2010 Index Consump on from: Million Litres per Million Litres per 2010/ Share Share litres capita litres capita 2006 Registered: - BiH dairies 146 37 55% 165 42 54 113 - imports 119 30 45% 142 36 46 120

Total registered 264 67 44% 307 78 45 116 consump on Unregistered consump on 333 84 56 373 94 55 118 Total consump on 597 151 100 680 172 100 114 Source: Dusan Loza

39 Razvoj trgovine i domaćeg tržišta u Federaciji BiH, Ekonomski ins tut Sarajevo, Sarajevo-Zagreb, 2010.

113 . Consump on of milk per capita is suggests that the average cost of imports has approximately 172 litres, of which the risen more than that of exports, refl ec ng a registered consump on is 44 percent and tendency to import higher value products. unregistered consump on 56 percent; The majority of dairy trade is with CEFTA . In comparison with 2005, per capita which is the sole des na on for exports of consump on of milk has risen 14 percent; dairy products. The other imports arise from EU Member States. . Of the registered consump on in 2010, 54 percent was supplied by domes c dairies 6.2.3 Domes c market channels and 46 percent by imports of dairy products; . Unregistered consump on is es mated Milk and dairy products reach consumers here to be 56 percent of all milk. through a variety of routes, principally: . Household use by the extended farm family; The es mates of milk produc on made . Direct sale of milk and dairy products by in Chapter 2 of this report, based on farm producers; surveys, suggest that considerably more milk is produced and consumed in Bosnia and . Sale at green markets, mainly of dairy Herzegovina: products but also some mes fresh milk; . Supply to dairies totalling 276 million litres . Sale of packaged milk and dairy products at (includes sales to unregistered dairies) shops and supermarkets. instead of 165 million litres (though the Household use same author quotes 211 million litres in another table, quoted in sec on 4.2.1 of The farm survey conducted for this study this report); found that almost 20 percent of milk was . Total unregistered consump on (on consumed by the “farm household”, though farm, direct sale, and via green markets this included an average of 5.7 family and middlemen) of 510 million litres, as members being supplied with milk and dairy compared to 373 million litres in the above products. Since the typical dairy farmer is table. in his 50s, in most cases this will not be the nuclear family of parents and young children, 6.2.2 The market for milk and dairy but the extended family. It is quite common in products the rural areas of Bosnia and Herzegovina for a family to build their own house on several The product off er in retail outlets is mainly levels, with each fl oor occupied by a diff erent confi ned to tradi onal Balkan staples, but part of the family, e.g. parents on one fl oor, with a reduced emphasis on fermented one brother and his family on another fl oor, products. There is hardly any penetra on of another brother and family on the last fl oor. imports of non-Balkan products, indica ng Whilst this would be treated in a popula on that the market is developing only slowly census as three diff erent households, all in respect of common EU products. For as will use milk and dairy products from the long as this con nues, the market will not same cows. Where the extended family is s mulate any need for product development not physically located in the same building, and the consequent needs for investment. it is common for rela ves to live in the same village and to come round each day for their Both imports and exports have increased milk. over the last fi ve years, but with a con nuing trade gap which reached more than USD 75 As well as accoun ng for the rather large million in 2010, almost the same as in 2006. number of people included in “household However, the trade gap in terms of weight use” of milk, these family arrangements also has narrowed to about 2,000 tonnes as provide a labour source for ac vi es such as opposed to more than 25,000 in 2006. This haymaking and repairs to farm buildings.

114 Direct sale large markets in Sarajevo, Banja Luka, Mostar and other main ci es the dairy counters Despite the signifi cant quan es of milk have refrigera on, washable surfaces and and dairy products believed to be marketed appropriately clothed staff , whilst in the through this route, approaching 10 percent smaller markets the counter-top may be a of total human consump on, it has been simple plas c tablecloth. very li le studied. In some parts of former Yugoslavia, milk producers travel door to Whilst originally conceived as “farmers’ door selling milk from a churn, though it is markets” an increasing propor on of the not known whether this prac ce is common trade is carried on by professional retailers in Bosnia and Herzegovina. or “middlemen”. Veterinary regula ons state that dairy products can only be sold at Another, and slightly more common, form green markets from registered farms mee ng of direct marke ng is sales of home-made various hygiene condi ons and poten ally cheese. Many families have their tradi onal subject to inspec on. In prac ce this system supplier, to whom they go once a week to may extend some control to the holding of buy white cheese and similar products. O en the actual stallholders but fails to encompass these rela onships last for many years and the various neighbouring farmers whose become a regular part of the household products they also sell. rou ne. Each vendor at a green market has to pay The hygiene of this arrangement is only as rent for their stall, as well as being subject good as that in the kitchens of the farmer and to various forms of inspec on. Therefore consumers: whilst far below EU standards many of the markets spawned an informal for dairies and formal retail outlets, it does periphery of street vendors, whose a en on not appear to be a major source of health to hygiene was scant, to say the least. problems, and people choosing to buy in this way accept the same risks as if they kept their Shops and supermarkets own cows. The approximately 35 percent of milk sold Green markets to registered dairies, plus the signifi cant Green markets are a long established and quan es of dairy imports, fi nd their way to important part of the BiH retail sector, consumers almost en rely through formal though it is diffi cult to quan fy the amount shops and supermarkets. In the socialist era of milk sold through them, since most of each major city in Bosnia and Herzegovina it is in the form of products made from the had one of more trade companies. They had approximately 35 percent of milk processed on from tens to thousands of shops, most of the holding. These are found in almost every which sold food as well as other products. town, organized by the local municipality and Most of these state companies have now been subject to control by veterinary, sanitary and priva zed; some of the new owners have kept market inspectors. the same type of business but many of them have not. Parallel with priva za on of the Usually the market consists of some established trading sector, some of the new permanent buildings as well as open-air stalls, entrepreneurs opened their own new shops. with the main sec ons for meat, fi sh and Most of the signifi cant popula on centres of dairy products located inside the buildings. Bosnia and Herzegovina are now covered by The stalls are focussed on fruit, vegetables one or more of the large supermarket chains and other less sensi ve products but it is such as Delta (now Delhaize), Mercator, also possible to fi nd some hard cheese being Interex and Konzum, but even so many locally sold in the open air. The level of hygiene owned companies have been successful depends on the size of the market: at the in compe ng with them and so far have

115 survived. threaten to compromise hygiene, prac cally all shops are equipped with chill cabinets, The current retail structure can be viewed as washable surfaces, etc. and should not face three main groups: any par cular problems in complying with EU . Large supermarkets/hypermarkets. regula ons for the retail sale of milk and dairy These include the larger stores of the products, and the large supermarket chains big national chains, and the few but are already opera ng to EU standards. large supermarkets so far established The perishable nature of many dairy products by international or local chains. They means that small shops con nue to play a are increasingly being located in edge- bigger role in the dairy sector than for many of-town retail parks and all have large other kinds of products. The exact marke ng areas for car parking. They tend to split varies from product to product, but advertise nationally on television and unfortunately no detailed market data are yet in newspapers, using price and special available. offers to attract customers to their stores, and offer the keenest prices in the retail Shops and supermarkets obtain these sector. products through contracts with dairy . Large shops/small supermarkets. These processors, and the larger the business, the include the smaller in-town stores run by greater the nego a ng power. The main the na onal supermarket groups and by suppliers of hypermarkets and supermarkets Konzum from Croa a, shops kept by local are the biggest diaries in BiH (Mlijekoprodukt, chains, and some independent shops. The Megle, Inmer, Milkos, PPM Tuzla and Natura large supermarket chains operate a fl at- Vita). Small market chains and individual rate pricing policy, so their smaller stores markets are mostly oriented to the supplies combine the convenience of a local shop and product range off ered by the nearest with the a rac ve prices of a large chain. local dairy, but as far as most other dairies are . Small shops. These are mainly small family- concerned, the supermarkets have the upper run businesses, which can be found in every hand. Prac ces reported – and complained neighbourhood. They cannot match the about loudly – by the surveyed dairies buying power of the large mul ples and included: so their prices are higher, but they off er . The system of “rebates” whereby the convenience and service, and will o en large retail chains nego ate discounts of extend informal credit to their established 515 percent on the published price list that customers. the dairies apply to their smaller customers. . Long delays in payment, which mean that The trend is defi nitely for growth of the the supermarkets have usually sold the larger supermarkets, and most families with products and had use of the money for a car tend to do their main weekly shop in several weeks before paying their suppliers. a supermarket and use their local store for perishable products such as bread and milk, . The insistence by the larger retail chains that and for anything they run out of. However, each of their suppliers pays a placement there are s ll very many families without charge, some mes in thousands of euros, their own transport, who remain dependent for each individual product (barcode) placed on their neighbourhood shop. on their shelves. All of these shops and supermarkets are 6.3 Interna onal trade subject to control by sanitary and, if they sell This sec on analyses the foreign trade of meat, veterinary inspectors. Whilst standards Bosnia and Herzegovina in each area of the of management may vary from shop to livestock sector, based on offi cial customs shop, and space constraints some mes data.

116 6.3.1 Trade balance by product • Beef (44 million KM); Pig meat (29 million KM); The Graph 6.1 presents the overall trade • balance in livestock products for 2010, by • Poultry meat (21 million KM); species and product. Columns above the • Off al (13 million KM), presumably for line (posi ve values) represent exports; processing. columns below the line (nega ve values) Of the 92 million KM of live animals imported show imports: in 2010, the main categories were: These data show several things: . Ca le: . Bosnia and Herzegovina has a signifi cant • For slaughter: 51 million KM trade defi cit in all forms of livestock • For fa ening: 14 million KM products, but it has important exports of • Breeding heifers: 6 million KM milk and dairy products (73 million KM) and meat products (39 million KM) as well as . Pigs, not purebred breeding animals: 9 exports of meat (13 million KM) and eggs million KM (9 million KM). . Sheep, not purebred breeding animals: 6 . The total value of exports was million KM 142 million KM, imports 425 million KM, . Poultry, grandparent and parent stock: and the trade defi cit in livestock products 2 million KM was 283 million KM. Quan es are reported by weight, not . The largest trades in both direc ons concern number, but the ca le imports appear to meat and milk from ca le, and the single be of around 53,000 ca le for slaughter and largest import is of milk and dairy products, 32,000 calves and bulls for fa ening. with a value of 146 million KM in 2010. . The other important imports are: Development of external trade in meat and livestock • Meat products (74 million KM); • Live ca le (71 million KM), both for The following graph shows the development further rearing and for slaughter; of imports and exports from 2006 to 2010:

Graph 6.1: BiH external trade for the livestock sector in 2010

Source: Customs data

117 Graph 6.2: Development of external trade in meat and livestock

Source: Customs data

Trade in both direc ons has increased over this Development of external trade in milk and period. In rela ve terms, exports have grown dairy products and eggs fastest, increasing more than three-fold, The following graph shows the development from 18 million to 63 million KM. However, of imports and exports from 2006 to 2010: absolute growth of imports was substan ally higher, increasing by 100 million KM from Imports and exports of milk and dairy 176 million KM in 2006 to 276 million KM in products have both risen at a similar pace, 2010. with exports increasing one and a half

Graph 6.3: Development of external trade in dairy products and eggs

Source: Customs data

118 mes, from 29 million to 73 million KM, an • Croa a absolute increase of 43 million KM. Over • TfYR Macedonia the same period imports rose by an almost • Republic of Moldova iden cal 44 million KM, from 102 million to 146 million KM, or just over 40 percent. • Montenegro • Serbia Trade in eggs is small compared to meat or • Kosovo milk, but exports have risen from under . one million in 2006 to almost 9 million KM Other: The rest of the world in 2010, whilst imports actually fell from Trade in live animals 4 million to 3 million KM. The following graph shows the development 6.3.2 Principal trading partners of live animal imports and exports by region. This sec on looks at import and export trade Two important changes took place in 2007: with the following regions: . Bulgaria and Romania joined the EU, ending . EU15: The 15 EU Member States before the some aspects of the preferen al trade 2004 enlargement; between these countries and Bosnia and Herzegovina; . EU10: The 10 new Member States that joined the EU in April 2004; . Bosnia and Herzegovina became part of CEFTA. . EU2: Bulgaria and Romania, which joined the EU at the beginning of 2007 (these This resulted in a signiﬁ cant reduc on in countries appear as “EU2” in the graphs also trade with Bulgaria and Romania, and an for 2006, just before they entered the EU); even larger increase in trade with other . CEFTA: Current members of the Central CEFTA countries – but most of the growth was European Free Trade Agreement: in imports rather than exports. • Albania CEFTA remains the major source of imports, • Bosnia and Herzegovina followed by the 10 new EU Member States,

Graph 6.4: Value of live animal imports and exports, by region

Source: Customs data

119 and also the main des na on for live animal . Czech Republic: 3 m KM exports (though customs data indicate a • Ca le: 3 m KM signifi cant export of live ca le to Lebanon in . Netherlands: 1 m KM 2010). There were no live animal export trades At the level of individual countries, the averaging more than 1 million KM per year, principal sources of imports are as follows. though ca le exports to Lebanon averaged Values are the annual average value of 0.9 million KM, and poultry exports to imports from 2006–2010, and the list includes Serbia and to Montenegro averaged 0.7 and only trades averaging at least 1 million KM 0.6 million KM respec vely. per year: . Serbia: 35 m KM Trade in meat and off al • Ca le: 33 m KM The following graph shows the development • Sheep and goats: 1 m KM of meat imports and exports by region. . Croa a: 12 m KM EU enlargement and the entry of Bosnia and • Ca le: 8 m KM Herzegovina into CEFTA in 2007 aff ected • Pigs: 3 m KM trade in meat just as much as in live animals, . Romania: 9 m KM and BiH meat exports really began to grow • Ca le: 6 m KM from that year, though at a much slower rate • Sheep and goats: 3 m KM than imports. . Poland: 9 m KM In contrast to the trade in live animals, many of • Ca le: 9 m KM the meat imports to Bosnia and Herzegovina . Germany: 5 m KM originate from the “old EU” and also from the world’s largest meat exporters such as Brazil, • Ca le: 4 m KM Australia and Argen na. The main origins of • Poultry: 1 m KM meat imports are shown in the following list, . Hungary: 4 m KM again giving the 5-year annual average import • Pigs: 3 m KM values: Graph 6.5: Value of meat imports and exports, by region

Source: Customs data

120 . Croa a: 19.1 m KM . Hungary: 2.8 m KM • Off al: 9.0 m KM • Pigs: 2.5 m KM • Ca le: 7.0 m KM . Australia: 2.4 m KM • Pigs: 3.2 m KM • Sheep and goats: 1.7 m KM . Brazil: 16.4 m KM . Slovenia: 1.6 m KM • Ca le: 8.3 m KM • Off al: 1.2 m KM • Off al: 8.1 m KM . Serbia: 1.5 m KM . Austria: 10.8 m KM • Off al: 1.2 m KM • Ca le: 4.4 m KM . Poland: 1.1 m KM • Pigs: 3.7 m KM • Ca le: 1.1 m KM • Off al: 2.7 m KM • Montenegro: 1.1 m KM . Netherlands: 9.0 m KM • Off al: 1.0 m KM • Off al: 4.7 m KM Meat exports worth more than 1 million KM • Pigs: 3.0 m KM per year were limited to exports of off al to • Ca le: 1.3 m KM neighbouring countries: . Germany: 8.9 m KM . Croa a: 2.9 m KM • Off al: 4.2 m KM • Off al: 2.9 m KM • Pigs: 4.0 m KM . Montenegro: 1.4 m KM . Argen na: 7.9 m KM • Off al: 1.4 m KM • Off al: 5.6 m KM . Serbia: 1.2 m KM • Ca le: 2.2 m KM • Off al: 1.2 m KM . Italy: 5.3 m KM • Off al: 3.6 m KM Trade in meat products • Ca le: 1.4 m KM The following graph shows the development . Turkey: 4.6 m KM of meat product imports and exports by • Off al: 4.6 m KM region:

Graph 6.6: Value of meat product imports and exports, by region

Source: Customs data

121 Here trade is more regional, with most . Kosovo: 8.6 m KM imports coming from other CEFTA members . Serbia: 5.6 m KM and from the central and east European . Croa a: 5.4 m KM members of the EU (the 10 new Member . States that joined in 2004). TfYR Macedonia: 1.9 m KM . Montenegro: 1.9 m KM Bosnia and Herzegovina also has signiﬁ cant . Serbia and Montenegro (before separa on): and growing exports of meat products, which 1.3 m KM increased by 220 percent over this period and now exceed 40 million KM per year. These Trade in milk and dairy products exports are mainly to CEFTA, but there are also The Graph 6.7 shows the development customers in the EU and the rest of the world. of imports and exports of milk and dairy The principal sources of import, with the products by region. annual average value of trade, are as follows: The majority of imports come from other . Croa a: 32.3 m KM CEFTA countries, but there are also signiﬁ cant . Serbia: 16.5 m KM imports from both old and new EU Member . Slovenia: 7.3 m KM States. . Serbia and Montenegro (before Exports, which have increased by 150 percent Montenegro’s secession): 4.7 m KM over this period to reach 73 million KM . TfYR Macedonia: 3.3 m KM per year, are exclusively to CEFTA. . Montenegro: 2.3 m KM The principal sources of imports and their average annual values of trade are: Exports of meat products go to almost the same group of countries, plus important . Croa a: 57.7 m KM exports to United Na ons-administered . Germany: 28.1 m KM Kosovo: . Slovenia: 16.3 m KM

Graph 6.7: Value of dairy imports and exports, by region

Source: Customs data

122 . Serbia: 11.0 m KM new Member States, and some mes from . Austria: 3.2 m KM other CEFTA members. . Former Czechoslovakia:40 2.2 m KM At the country level, the main sources of . Hungary: 2.1 m KM imports are: . Slovenia: 1.1 m KM The main export des na ons are: . Serbia: 1.0 m KM . Croa a: 30.3 m KM . Hungary: 0.5 m KM . TfYR Macedonia: 9.5 m KM . Croa a: 0.3 m KM . Serbia: 6.2 m KM . Austria: 0.2 m KM . Kosovo: 2.9 m KM . Former Czechoslovakia: 0.2 m KM . Montenegro: 1.6 m KM (Only Slovenia exports over 1 million KM worth Trade in eggs of eggs per year to Bosnia and Herzegovina, The following graph shows the development so the list includes all trades worth at least of egg import and export products by region: 100,000 KM). Total trade in eggs is rather small, but it is the Exports go to the following countries: one part of the livestock sector in which Bosnia . Croa a: 1.5 m KM and Herzegovina has achieved a posi ve trade . Serbia: 0.9 m KM balance, with exports predominantly going to . Montenegro: 0.8 m KM CEFTA countries. . Kuwait: 0.3 m KM The source of imports varies from year to . Serbia and Montenegro (before separa on): year, with supply some mes coming from the 0.1 m KM

Graph 6.8: Value of egg imports and exports, by region

Source: Customs data

40 These data are from Customs sta s cs, which respond to changes in na onal boundaries, some mes with a signiﬁ cant me lag. Up un l the separa on of Serbia and Montenegro, imports were recorded as being from “Serbia and Montenegro” and it is not now possible to disaggregate them. Imports from the Czech and Slovak Republics were some mes recorded by republic and some mes under the overall label of “Former Czechoslovakia”, and again it is not possible to disaggregate them.

123 The trade with neighbouring countries is to was that Croa a’s entry to the EU – and be expected, with the one surprise being the exit from CEFTA – would dras cally cut this export of 1.7 million KM of eggs to Kuwait in hard-won export success (see sec on 9.2.4). 2010. Such concerns are not unfounded, and the signifi cance of Croa an accession is indicated 6.3.3 The threat of EU enlargement by the following table showing 2010 trade There are just two countries that have in livestock products between Bosnia and appeared in every one of the above lists: Herzegovina and the EU (Table 6.3). Croa a and Serbia. Of most immediate This shows two important things: concern is trade with Croa a, whose entry to the EU is expected to be agreed as this report . The value of livestock products trade is being fi nalized. with Croa a was greater than with all 27 EU Member States; In 2010 total trade in livestock products . Trade with Croa a included signifi cant between Bosnia and Herzegovina and Croa a exports, whilst trade with the EU is almost exceeded EUR 100 million for the first time, en rely one-way: imports from the EU to with exports totalling 56 million KM, imports Bosnia and Herzegovina. The only signifi cant totalling 137 million KM and an overall trade export to the EU was of meat products, value of 192 million KM (Table 6.2) which reached a peak of 2.8 million KM in The main concern expressed in the SWOT 2007, dropped back to 0.5 million in 2008, seminars, in both Sarajevo and Banja Luka, and have since ceased en rely.41

Table 6.2: Trade in livestock and livestock products between BiH and Croa a

Item Export value Import value Total trade Milk 36.4 m KM 64.1 m KM 100.5 m KM Meat products 7.9 m KM 37.8 m KM 45.7 m KM Meat 19.2 m KM 19.2 m KM Oﬀ al 6.9 m KM 9.2 m KM 16.1 m KM Live animals 0.0 m KM 6.3 m KM 6.3 m KM Eggs 4.5 m KM 0.2 m KM 4.7 m KM All livestock products 55.7 m KM 136.7 m KM 192.4 m KM Source: Customs data

Table 6.3: Trade in livestock and livestock products between BiH and the EU

Item Export value Import value Total trade Milk 0.0 m KM 66.7 m KM 66.7 m KM Meat 37.8 m KM 37.8 m KM Live animals 0.2 m KM 29.6 m KM 29.9 m KM Oﬀ al 0.1 m KM 21.7 m KM 21.9 m KM Meat products 4.9 m KM 4.9 m KM Eggs 1.1 m KM 1.1 m KM All livestock 0.4 m KM 161.9 m KM 162.3 m KM products

41 Though interes ngly, one of the visited meat plants claimed to be expor ng meat products to the EU with the facilita on of an EU-based daughter company.

124 When Croa a joins the EU, all trade from obtained for direct sale, which was the Bosnia and Herzegovina to Croa a will have main marke ng route for eggs not sold to to fulfi l all requirements for exports to the EU, shops. including mee ng its strict sanitary and animal . Import and export values are derived from health standards. Bosnia and Herzegovina’s customs data, in line with all other trade current export performance indicates that it sta s cs in this chapter. is largely unable to fulfi l these requirements, and so the legal export of animal products to . Total domes c consump on is calculated as Croa a may almost cease – though whether a total supply (domes c produc on + imports) less formal trade will develop in response to minus exports (which assumes that opening market demand remains to be seen. and closing stocks were negligible and/or approximately constant). The next enlargement The overall value of domes c produc on No metable has been given for the next is es mated at about 1.6 billion KM whilst enlargement of the EU, but a number of domes c consump on is es mated at commentators have suggested that Serbia, 2.1 billion KM (though both fi gures are Montenegro and TfYR Macedonia might underes mates since they do not include the well join as a group, ahead of Bosnia and value added by processing). This table is the Herzegovina, Kosovo and Albania. Were this source of the self-suffi ciency es mates given to occur, the export opportuni es of Bosnia in sec on 6.1 above, including the overall and Herzegovina would be even further value of 76 percent for the livestock sector. curtailed, making it impera ve that the government and the sector start to achieve The signifi cance of the diff erent marke ng EU standards, have this recognized by the routes is discussed in the fi nal sec on of this European Commission, and begin to build up Chapter. livestock sector exports to the EU. In round terms, the supply of livestock products to the popula on of Bosnia and 6.4 Supply balances Herzegovina comes, by value, from: The following table presents a dra overall . Food produced and consumed by the supply balance for the BiH livestock sector, extended farm family: 20 percent comprised of: . Food produced domes cally and marketed . Domes c produc on es mates from informally: 25 percent Chapter 3, for which it should be noted that: . Food produced domes cally and marketed • No es mates are made of the value of through formal channels: 35 percent meat products or off al, though the value of the raw materials used is included in . Imported food, mainly sold through formal the es mated output value of beef, sheep channels: 20 percent meat, pig meat and poultry meat (which In addi on, a further 5 percent is produced tends to undervalue this produc on); domes cally and exported through formal • Home-produced dairy products have channels. been valued at the dairy purchasing price of the milk used (which again tends to 6.5 The market and trade eff ects of undervalue produc on), and allocated non-marketed produc on 30:70 between household use and This fi nal sec on looks at the economic informal sale; signifi cance of the less formal marke ng • Eggs used for household consump on routes that have been such a recurrent theme have been valued at the average price in the earlier chapters of this report.

125 gs–Sos------6 M66 m KM 66 m KM 19 m KM 144 m KM - 20 m KM 13 m KM 144 m KM 19 m KM 20 m KM 13 m KM - 62 m KM - - 108 m KM - 52 m KM - - - 62 m KM 52 m KM - - 122 m KM 588 m KM - 46 m KM - - 108 m KM - - - - - 122 m KM - - 339 m KM - - - - 21% 46 m KM - 203 m KM - - - - - 424 m KM - - - 52 m KM - - - 168 m KM ------175 m KM - - 106 m KM - - - 49 m KM - - - 257 m KM - 6 m KM – Shops Eggs - Milk – Middlemen Total formal marke 88 m KM 17 m KM - Milk – Dairies 67 m KM Meat – Slaughterhouses - - 167 m KM 6 m KM 43 m KM 115 m KM – Green Eggs markets - 88 m KM 40 m KM – Direct Eggs sale Total informal marke 67 m KM Dairy products – Informal sale - Milk – Direct sale 43 m KM Meat – Informal slaughter – Household use Eggs Dairy products – Household use Total household use Milk – Household use Meat – Home killed OA OETCPOUTO 4 M22mK 6 M18mK 0 M151 m KM 502 m KM TOTAL 198 m KM MILK AND EGGS 361 m KM 232 m KM 340 m KM TOTAL DOMESTIC PRODUCTION LIVESTOCK, MEAT AND MEAT PRODUCTS Item mot–Lv nml 1mK M1 M4mK 92 m KM 21% 425 m KM 3 m KM 333 m KM - 146 m KM 154 m KM 3 m KM 43 m KM 648 m KM 43 m KM 146 m KM 74 m KM 43 m KM 74 m KM 4 m KM - 74 m KM 202 m KM 31 m KM 392 m KM 0 m KM 240 m KM 8 m KM 455 m KM 21 m KM 4 m KM 115 m KM 2 m KM 11 m KM 44 m KM 6 m KM 71 m KM TOTAL SUPPLY Import – Products Import – Live animals Total imports xot–Pout 9mK 3mK 3mK M134 m KM 7 m KM 9 m KM - 73 m KM -7% 13 m KM 39 m KM - 141 m KM - 9 m KM 73 m KM - 13 m KM - 39 m KM 3 m KM - - 0 m KM 0 m KM 3 m KM 4 m KM - 0 m KM 0 m KM 4 m KM Domes Export – Products Export – Live animals Total exports OA S 5 M20mK 9 M22mK 4mK 3mK 4 M154 m KM 648 m KM 43 m KM 74 m KM 202 m KM 392 m KM 240 m KM 455 m KM TOTAL USE e mot 1 M8mK 1mK M3 M3 M7 M- M23mK 14% 283 m KM -6 m KM 73 m KM 30 m KM 35 m KM 1 m KM 31 m KM 8 m KM 111 m KM Self-su Net imports akto rd ot Ca Market or trade route ﬃ iny7%9%9%9%**8%14 76% 104% 87% * * 99% 92% 96% 75% ciency c consump n 5 M4 M16mK 7 M 13mK 6mK 1 M40% 817 m KM 66 m KM 163 m KM 175 m KM 106 m KM 49 m KM 257 m KM ng o 5 M20mK 9 M19mK 5mK 0mK 7 M145 m KM 575 m KM 30 m KM 35 m KM 199 m KM 392 m KM 240 m KM 451 m KM on n 0mK 1 M17mK 7mK 7 M3 M52mK 26% 542 m KM 33 m KM 170 m KM 17 m KM 167 m KM 115 m KM 40 m KM ng Table 6.4: dra l he isPoultry Pigs Sheep le overall supply balance for the BiH livestock sector products* Meat O ﬀ a*Ml Eggs Milk al* All species products 1,782 m 2,208 m 2,208 m 2,066 m and KM KM KM KM consump domes Share of 100% 86% c on

126 Marke ng routes for meat and milk milk is consumed by farming families and rela ves. Around 18 percent of all meat In Bosnia and Herzegovina, meat, milk and is slaughtered on the farm and either dairy products reach the consumer through consumed by the farm family or (less fi ve main routes: frequently) sold directly to friends and 1. Sale to registered slaughterhouses and neighbours. dairies, which in turn sell their products to registered shops and supermarkets. There is a tendency for commentators and This route accounts for around 38 percent policy-makers to focus just on the fi rst of of all milk for human consump on and these fi ve routes, and thus to ignore around 54 percent of meat. half of all livestock output (46 percent of 2. Sale through green markets; although less meat produc on and 62 percent of dairy structured than shops and supermarkets, produc on), claiming that only the fi rst these are registered marke ng channels, route counts as “market” or “commercial” subject to inspec on supervision and produc on. monitored by the sta s cal offi ces. Contribu on to food supply and agricultural They are not a major outlet for meat but incomes account for up to a third of all milk, mainly in the form of cheese and fermented The main objectives of agriculture are to products produced on the holding. produce food for the consumer and income 3. Direct sale of live animals to butchers and for the producer. Clearly all five routes restaurants; this results in unregistered contribute to the supply of food, and the slaughtering, though the fi nal retail sale first four routes all generate income for the of the meat in the butchers’ shops and farmer; indeed, the farmer who processes restaurants is a registered ac vity. It is his own milk and sells the products direct es mated that 28 percent of all meat is or at a green market can double his cash marketed in this way, with its role greatest income compared to selling the milk to for sheep meat and least important for a dairy. The fifth route does not directly poultry meat. generate income but it is “income-saving”, in that the farming family does not need 4. Direct sale of milk, dairy products, meat to earn money to buy its meat and dairy and live animals to friends and neighbours products, and so is of equal value to the in the village; this is essen ally an farmer. Thus from an economic perspective, unregistered ac vity, though it is common all five routes are equally valid and all prac ce to submit pig meat samples to the contribute to GDP. local veterinarian for trichinella tes ng before star ng to consume a home-killed The main weaknesses of the less formal pig. Such direct sales are much more marke ng routes are that hygiene and animal important for milk and dairy products welfare are less controlled, that they tend to than for meat, account for approximately avoid the tax system, and that their products 9 percent of milk. are not generally available for export, though 5. Consump on by the farm family and they do contribute directly to the balance of rela ves without any marke ng or payments. exchange of money. This is quite common Eff ect on markets and trade in the villages, and as most town-dwellers s ll have some rela ves living in the If the “market” is considered as the formal countryside, it is common for them to wholesale and retail channels, with their bring back products such as cheese and supply, demand and price forma on, then pršut a er each visit to their rela ves. It how does each of the fi ve marke ng routes is es mated that around 16 percent of all act on the market?

127 Clearly, the fi rst route – via formal This is exactly what has happened in many slaughterhouses and dairies – directly new EU Member States, par cularly with pig provides supply to the formal market. and poultry meat: rising feed prices have made home produc on more expensive, whilst The second, third and fourth routes – the liberalized imports have made meat available various forms of less formal and direct sale in the shops at less than the cost of producing – also off er a supply of food to the general it in the backyard. Many rural households consumer and so contribute to the forma on have stopped keeping their own livestock of market prices: if the supply of produce and switched to buying in the shops, but as at green markets and these other channels domes c producers are o en less effi cient than rises, this will act to drive down prices both their European compe tors, much of the meat at these informal markets and, by knock-on that these rural households buy is imported. eff ect, in the formal retail outlets. Eff ect on balance of trade The fi h route – consump on by the farming family – does not provide a supply to the In terms of the na onal balance of trade, one open market, but it does serve to reduce euro increase in exports is equivalent to one demand, in that the produce obtained in euro decrease in imports. Just as meat and this way subs tutes for purchases from the milk produced and consumed on the farm market. If home produc on of meat and dairy are “income-saving”, so domes c produc on products were to fall, perhaps in response and consump on is “import-saving” or to regula on, compe on, or changes in “import subs tu on”. The informal routes lifestyle, then consumers would need to buy iden fi ed above have a massive import-saving more from the market, tending to drive prices eff ect for Bosnia and Herzegovina, and the up. If domes c supply to the formal market following graph indicates how its trade defi cit did not rise fast enough to keep pace with in livestock products would grow if these this increasing demand and so generated informal routes were to be progressively moderate price rises, then foreign producers closed down without a compensa ng growth would respond to the rising prices on the BiH in domes c produc on and supply to the market, and imports would increase. formal market:

Graph 6.9: Poten al eﬀ ect on trade balance of curtailing informal marke ng and household use of livestock products

Source: Project es mates from mul ple sources

128 . The fi rst set of columns shows the be expected in 20–30 years me could be situa on in 2010: Livestock exports very diff erent: worth 140 million KM, imports worth . A smaller number of larger farms, mainly 420 million KM, and a net trade defi cit for selling through formal marke ng channels; the sector of 280 million KM. . A more urban popula on, with weaker links . The second set of columns show what to the countryside and less access to family- would happen if household produc on produced livestock products; and use of livestock products were to be . Membership of the EU, with strict EU abandoned and these consumers were standards applying to all formal marke ng instead to buy in the shops what they now channels and “equivalent na onal produce. As domes c produc on is already standards” applying to the “direct sale of less than demand for almost every product, products in small quan es to the fi nal it is likely that most of this extra food would consumer”; have to be imported, causing imports to . Greatly increased imports and exports double to 850 million KM and the sectoral within the EU Single Market. trade defi cit to rise 150 percent. . The fi nal columns show what would Given the known current situa on and the happen if the government acted to stamp expected future situa on, what policies out informal slaughtering, processing should government apply now in respect of and marke ng and producers responded livestock produc on and marke ng? The by abandoning produc on, rather than key point is that government must focus on supplying formal markets. Under this encouraging commercial producers and the scenario, imports would rise to 3.3 mes formal processing and marke ng sectors, not their current level, at 1.4 billion KM, and on discouraging the small-scale and informal the trade defi cit would reach 1.3 billion KM, sectors. In par cular, over-zealous regula on some 4.4 mes its level now of the informal markets could cause real hardship to some of the poorest households It is not claimed that this graph shows exactly in society, and be disastrous for the na onal what would really happen under each of balance of payments. these scenarios, as diff erent producers would choose diff erent op ons in response 6.6 Summary of marke ng and trade to changing condi ons – some switching Domes c marke ng to formal market channels, some changing their form of produc on, and some indeed Within BiH, livestock products reach their fi nal ceasing to produce. The point being made consumers through a wide range of marke ng is that the import-subs tu ng eff ect of the routes – household consump on, direct sale, household and informal sectors makes a very green markets, shops and supermarkets – great contribu on to the na onal balance of with each playing an important role. payments – almost seven mes greater than the actual value of exports by the formal The sector has made rapid progress in sector. recovering from the eff ects of the war, including product development, packaging Conclusions and marke ng, though so far the emphasis has been mainly on tradi onal products The current situa on is that informal market consumed in BiH and neighbouring CEFTA routes account for around half of the na onal countries, with innova on into newer west- food supply of meat and dairy products, European products progressing only slowly. half of farmers’ livestock incomes, and play an essen al role in the na onal balance of The recent arrival of several foreign-owned payments. However, the situa on that might supermarket chains may supply a conduit for

129 introducing new products, and the steady rise with all 27 EU Member States put together. in per capita GDP may increase the demand This trade with Croa a includes signifi cant for novel and higher quality products. exports, whilst trade with the EU is almost Whilst ini ally appearing as compe on, en rely one-way: imports from the EU into this development would give processors the Bosnia and Herzegovina. s mulus and opportunity to develop new products that will be needed in future. Given that Bosnia and Herzegovina has not yet obtained EU approval for export of its However, these supermarket chains bring key livestock products, formal export of such with them their own business prac ces, products to Croa a will stop abruptly on the including charging processors for each new la er’s entry to the EU. product placed on their shelves and delaying payment for 90 days or more. Such prac ces The role of informal produc on and will make it hard for small processors and marke ng suppliers, and may encourage polariza on of As discussed specifi cally in sec on 6.5 above, the processing and marke ng chains. informal market routes currently account for Interna onal trade around half of the na onal food supply of meat and dairy products and half of farmers’ BiH runs a signifi cant trade defi cit in livestock livestock incomes. They also play an essen al and livestock products, now running annually role in the na onal balance of payments, since at more than EUR 100 million (213 million KM the value of informally marketed products is in 2010). Both exports and imports are growing equivalent to seven mes the total value of steadily. Exports are increasing in relative livestock-product exports. terms faster than imports – up two and half times in the four years from 2006 to 2010 – This situa on will change over me, as BiH but imports were much higher to start with becomes more urban and more integrated and the overall trade deficit is still increasing. into the EU, and its agriculture slowly changes from a pa ern of semi-subsistence The most serious and urgent factor within small farms to more commercial produc on. interna onal trade will be the eff ect of However, such change will take a genera on Croa a’s entry into the EU later this year. or more, and in the mean me government Croa a forms BiH’s largest export market, and has to develop policies that are appropriate in recent years the value of livestock products to both the reality of today and the vision of trade with Croa a has been greater than tomorrow.

130 7. Level of a ainment of relevant EU standards

. Chapter 4 on processors gives some have focussed on animal health and animal indica on of their closeness to EU standards, iden fi ca on at the state level, and on milk Chapter 8 reviews on-farm infrastructure hygiene and tes ng within the RS en ty. and the investment needed in order to come up to EU standards, and Chapter 5 outlines Annex 6 presents a checklist for dairy the system of policy and regula on that farms, lis ng both specifi c requirements sets and enforces standards within Bosnia of EU legisla on and other factors without and Herzegovina. This chapter therefore which it will be diffi cult in prac ce to meet provides a concise summary of the current the EU standards for milk hygiene. state of play, and highlights those areas 7.2.1 Animal health where most a en on is needed: . Sec on 7.1 gives a very short summary of Bosnia and Herzegovina is an ac ve member where Bosnia and Herzegovina currently of OIE, the World Organisa on for Animal stands in rela on to diff erent aspects of the Health, and is free of most serious epizoo c EU acquis covering livestock produc on and diseases, such as Foot and Mouth Disease. processing. However, it has had recent outbreaks of Q-fever and brucellosis, the la er controlled . Sec on 7.2 reviews the standards and by vaccina on. current situa on for livestock farms. . Sec on 7.3 looks par cularly at milk quality, In 2004, Bosnia and Herzegovina began spanning the link between dairy farms and to implement a programme of residue milk processors. monitoring based on Council Direc ve 96/23/ EC of 29 April 1996 on measures to monitor . Sec on 7.4 reviews the standards and certain substances and residues thereof in current status of milk and meat processors. live animals and animal products, which . Sec on 7.5 sets out very briefl y the situa on s pulates a minimum sampling frequency concerning export of meat, milk and dairy and tes ng regime in order to check a broad products to the EU. matrix of livestock products for residues . Sec on 7.6 presents conclusions on the of illegal growth promoters, veterinary a ainment of EU standards by farmers, medicine residues above permi ed limits, processors and the offi cial veterinary and contaminants. Analyses are performed services. in accredited laboratories abroad. An FVO mission in September 2010 reviewed this area 7.1 EU acquis for the livestock sector and made a number of recommenda ons on the approval and control of veterinary Current implementa on of the EU acquis medicines and on the residue tes ng for the livestock sector is summarized under programme, most of which have already 12 areas in the Table 7.1. The remainder of been implemented. this chapter focuses on the regulatory areas of greatest concern. The systems for marke ng and recording the use of veterinary medicines were not 7.2 Standards for livestock farms inves gated, but given the small and informal Regula on of livestock farms falls under farm structure, problems might well occur. state, en ty, canton and municipality 7.2.2 Animal welfare level structures, as outlined in sec on 5.5 above, and suff ers from a lack of coherent General standards for farm animal welfare organiza on and a clear chain of command. are set out in Council Direc ve 98/58/EC of The main coordinated ini a ves so far 20 July 1998 concerning the protec on of

131 Table 7.1: Current implementa on of the EU acquis for the livestock sector Area Issue Status in Bosnia and Herzegovina Generally close to EU standards, with problems in rela on to Classical Animal health Swine Fever, and veterinary control systems.

Problems remain to be addressed, par cularly on smaller farms and for Animal welfare pigs and poultry; on-farm and informal slaughter raises serious animal welfare concerns.

EU-compa ble system in place for bovines and being introduced for Animal iden fi ca on sheep, goats and pigs, but major problems of movement repor ng remain. Regula on Dairy: Serious and widespread problems of farm hygiene remain; offi cial control of hygiene at dairy plants is weak, but the dairies themselves are Hygiene at farms ac ve; tes ng of raw milk and quality payment are progressing well in and processing RS. plants Meat: Fewer issues on farms; hygiene at larger processing plants is generally good, but much meat is produced outside registered premises. Environmental Manure storage and handling are generally poor, though the small size of protec on at farms most farms limits the environmental impact; pervasive and more serious and processing problems of dairy effl uent; urgent need for systems to store, collect and plants dispose of animal waste. Market interven on No interven on mechanisms in place for meat or milk. Demand promo on No school milk scheme in place. Tariff reduc ons being phased in under SAA; no remaining quotas or Trade policy M licenses. Marke ng standards Being harmonized with EU. No quota system in place (EU system will expire in 2015 before likely BiH Milk quotas accession). No Single Area Payment Scheme (SAPS) or Single Payment Scheme(SPS); Single farm payment livestock support mainly through headage payments and input and output subsidies, especially milk subsidy. S Rural development strategies in place in both en es and BD, designed Rural development along EU lines; systems being developed for future implementa on of measures IPARD. animals kept for farming purposes. This covers Council Direc ve 93/119/EC of 22 December issues such as space, freedom of movement, 1993 on the protec on of animals at the me health care, feed, water and ven la on, of slaughter or killing covers all farm species. with the overall objec ve of ensuring that It includes a provision for Member States animals are not caused any unnecessary pain, to authorize home slaughter of poultry, suff ering or injury. The issues covered depend rabbits, pigs, sheep and goats for personal partly on farm infrastructure and partly on consump on, but states that “Animals shall management, and more specifi c requirements be spared any avoidable excitement, pain are set out in detailed legisla on for calves, or suff ering during movement, lairaging, pigs and poultry (see below). Importantly restraint, stunning, slaughter or killing” for Bosnia and Herzegovina, Direc ve 98/58 and requires that pigs, sheep and goats are does not set any minimum size of holding stunned before slaughter. and hence applies to all farms, whilst the individual specifi c direc ves each set Ca le minimum numbers of animals below which There are as yet no specifi c direc ves on the they do not apply. welfare of dairy cows and beef ca le, as they

132 are not generally a problem area, and so the pigs applies to holdings with at least 6 pigs requirements of Direc ve 98/58 apply. or 5 sows and their piglets, thus excluding a large number of small pig farms in Bosnia and The principal concern in Bosnia and Herzegovina. Herzegovina relates to housing, with a high propor on of cows being kept in tethered For larger producers, the main compliance stalls or stables, frequently without adequate issue will relate to minimum space light or ven la on, and some mes with requirements. For growing pigs, which are unreliable water supplies. This is one of the usually moved through successive pens of issues to be addressed by investments in increasing size as they grow, it will usually be ca le farm infrastructure. possible to comply with the Direc ve through rela vely simple changes in management, Care and housing of six or more calves is though with some reduc on in total covered by Council Direc ve 91/629/EEC throughput per building. For breeding pigs, laying down minimum standards for the some facili es may require adapta on or protec on of calves, but as very few calves are reconstruc on in order to provide suffi cient intensively reared in Bosnia and Herzegovina, space for each farrowing sow and her piglets. compliance with this direc ve will not be a widespread problem. Poultry On-farm and informal slaughtering of calves is Council Direc ve 1999/74/EC of 19 July 1999 widespread, typically with primi ve restraint laying down minimum standards for the and no stunning, and is not permi ed under protec on of laying hens applies to holdings Direc ve 93/119. with more than 350 laying hens, and hence Sheep excludes the widespread backyard poultry produc on. Its most important provision is the Generally similar to ca le, without species- phasing out, by January 2012, of tradi onal specifi c legisla on. Most sheep are kept ba ery cages and their replacement by quite extensively and the main hazards they “enriched cages” with more space and with face come from the weather and wolves, perches. It is not known how many ba ery rather than the man-made factors, though farms in Bosnia and Herzegovina comply with the Annex to Direc ve 93/119 states that the new requirements, but it is likely that “Animals not kept in buildings shall where many do not and so will require extensive necessary and possible be given protec on investment in order to conform. from adverse weather condi ons, predators and risks to their health”. Council Direc ve 2007/43/EC of 28 June 2007 laying down minimum rules for the protec on The same issues of on-farm and informal of chickens kept for meat produc on covers slaughter apply, par cularly in rela on to holdings with more than 500 broilers, thus slaughter by restaurants and by families for excluding typical household produc on of special celebra ons. Within slaughterhouses, 50–100 broilers at a me. The main issue in Direc ve 93/119 includes a special exemp on implementa on will be the space requirement which allows religious slaughter without per hen, as high stocking densi es are o en prior stunning, but this exemp on does not employed in broiler units within BiH. The appear to extend to home slaughter, raising open-plan layout of most broiler buildings ques ons about household slaughter of means that this can be complied with by sheep for Bajram. simply reducing the number of hens in each cycle, without signifi cant infrastructural Pigs change. However, this will reduce the Council Direc ve 1991–630 laying down throughput per house and so will require the minimum standards for the protec on of construc on of addi onal buildings in order

133 to maintain current output, let alone provide usually from maize, which has a higher dry for future expansion. ma er and hence less of an effl uent risk. Larger farms should be informed of the 7.2.3 Animal iden fi ca on importance of proper si ng and design of An EU-compa ble animal iden fi ca on silage clamps, but it does not appear to be a system for ca le has been put in place with widespread environmental problem. EU project assistance, and is currently being improved and extended to small ruminants. It 7.3 Milk hygiene and quality grading suff ers to some extent from the four problems Milk hygiene is measured by two parameters: that aff ect all I&R systems in the region: Soma c Cell Count (SCC) and Total Bacterial . Failure to register all holdings, apparently Count (TBC). The former, SCC, is indica ve with quite a number of the very small of animal health especially in rela on to holdings being omi ed; mas s, a bacterial infec on of the udder . Late/non-registra on of births, with some which causes release of leucocytes (white calves being reared and slaughtered on blood cells) into the milk. farm without ever entering the database; TBC is a direct measure of bacterial prolifera on . Late/non-registra on of deaths and as a result of poor milking hygiene and slaughterings, leading to “ghost cows” on ineff ec ve cooling. Milk, the most perishable the system; agricultural output, must be cooled to 6°C or . Late/non-repor ng of movements, leading less within two hours of drawing from the cow, to ca le not actually being in the place and then maintained within this temperature where they are recorded as being. range un l delivery to the dairy. The implica ons of this when using the I&R 7.3.1 EU standards in force system as a data source are discussed in sec on 3.1.1. The implica ons for animal EU legisla on sets fi rm standards for both and public health are that the I&R system Soma c Cell Count and Total Bacteria Count: cannot be treated as a 100 percent reliable EU standards for Soma c Cell Count (SCC) basis for tracing and disease control, but as an extremely useful tool to support fi eldwork . A three-monthly rolling geometric average by veterinarians. of cell count in milk should not be greater than 400,000 cells per ml. However, in the In summary, the system is not yet as good as majority of EU na ons the market usually it should be, but does form a solid basis for demands much lower levels for premium further development and improvement. products, with an average threshold of Environment around 200,000 cells. There are two main environmental risks from . EU milk processors typically pay a premium dairy farms: animal manure and silage effl uent. of 3 to 5 percent of milk price when the SCC is below the agreed premium threshold, a Manure neutral price above that threshold and then Manure storage is clearly a problem, with price reduc ons of 5–10 percent are applied around three-quarters of sampled farms for a higher threshold, o en 250,000 cells, having inadequate facili es. Priority should be up to the regulatory level of 400,000. given to addressing this on the larger farms, . Milk with a persistently high cell count is where the pollu on poten al is greatest. rela vely worthless, even if some form of market can be found; dairies typically Silage effl uent apply penal es of 30–60 percent of the The large majority of farms make hay rather regular price and also o en charge special than silage, and where silage is made it is collec on costs.

134 . Of more strategic importance are those One comment about these bands is that farms that fail to meet the regulatory none of the cut-off s exactly coincides with threshold. In northern Europe this is usually the EU TBC threshold of 100,000. It might be no more than 1 percent of producers and desirable to redefi ne the boundary between usually only for a short period. Class I and Extra as 100,000. Also in future, when milk quality has further improved, the EU standards for Total Bacterial Count (TBC) current Extra band could be divided into two: . Milk quality direc ves specify that bacteria . Standard: 50,001 to 100,000 (refl ec ng the in milk be measured by a tradi onal plate fact that this is the minimum acceptable count. However, there is widespread use of in the EU and that classes I–IV are actually rapid analy cal technology, although there substandard in EU terms, and so milk in these is no agreed calibra on to relate its results bands will not in future be acceptable). to plate counts. . Extra: ≤ 50,000 (to give a higher target at . It is clear that the majority of EU countries which farmers can aim in order to achieve a have no signifi cant problem of farms failing higher milk price). to supply milk with fewer bacteria than 100,000 per ml. Na onal average bacterial Widespread and mely cooling of milk has led contents are frequently less than 10,000 to a gradual improvement of hygienic quality, per ml. as reported by one of the largest dairies in Republika Srpska and shown in the Graph 7.1. . Bonuses and penal es are applied in a manner similar to SCC. There has been remarkable progress in the dairy’s raw milk quality over the 17 7.3.2 Recent ac ons to achieve EU months from the start of 2010, though it standards should be borne in mind that there are Both en es have adopted quality grades seasonal factors that aff ect milk hygiene, in for raw milk. These were introduced in the par cular the ambient temperature profi le. Republika Srpska in January 2010 and in the This improvement has been reinforced by a Federa on in May 2011, though it is too gradual introduc on of quality bonuses for soon to observe any changes in milk quality processors. However, not all dairies have yet in the Federa on as a result of this recent adopted bonus payments, since they are s ll change. Informa on gained during factory made on a voluntary basis and so far only visits indicates that the two en es are using applied by the larger dairies. similar payment bands, but the Federa on Current milk quality had not issued any formal document and dairies were s ll not applying the scheme. Data provided by the RS ministry of agriculture The quality bands and payment bonuses for 2010 showed the number of producers and penal es applied in RS are shown in the and quan ty of milk falling into each quality following table: band (used as a basis for subsidy payments). Table 7.2: Milk quality grading parameters Total bacterial count Soma c cell count (SCC) Class Payment adjustment (TBC) per ml per ml Extra ≤ 80,000 ≤ 300,000 +5% I 80,001 to 200,000 300,000 to 400,000 0 II 200,001 to 400,000 400,001 to 500,000 -5% III 400,001 to 800,000 500,001 to 800,000 -10% IV > 800,000 > 800,000 Source: RS Ministry of Agriculture

135 Graph 7.1: Improvement in raw milk hygienic quality 2010-11

Source: Visited dairy plant, internal data

Some 40 percent of the collected samples One dataset that was conspicuous by its could not give a reliable reading for various absence was a monthly record of the quan ty reasons; excluding these gives the following of milk falling into each quality band – a key breakdown. variable that most competent authori es would use to monitor achievement of their milk This shows that all of the milk of EU quality is quality objec ves. The milk tes ng laboratory produced by less than 1,000 farms, together at Banja Luka is focussed on returning quality providing some 43 percent of the total supply results to the dairies for use in their quality to dairies collected in RS. These are the larger payment systems, rather than in strategic farms, averaging 100 litres per day, but that is monitoring and analysis, and was unable to s ll an average of just over 7 cows per farm, provide the project with any historical dataset. so they would certainly not count as large by Even if they had kept such records, they European standards. Across all 6,100 farms receive just milk samples without any note of supplying dairies in the month of October, the quan es of milk that they represent, so it the average herd size was 3.7 cows and the would not be possible to generate en ty-level average milk supply 37 litres. es mates of milk quality.

Table 7.3: Number of producers and quan ty of milk falling into each quality band Share of milk in No. of farms in Share of farms in Milk quality band Av. daily collec on band band band E 43% 958 16% 100 litres 1 15% 821 13% 41 litres 2 11% 809 13% 29 litres 3 13% 1,179 19% 24 litres 4 19% 2,332 38% 18 litres Total 100% 6,099 100% 37litres Source: RS ministry of agriculture

136 The project was provided with the above data medium-sized farms that do milk by machine from the RS ministry of agriculture, allowing are s ll using old-fashioned machines without analysis of milk quality for this one month, pulsators, which o en caused udder damage but it appeared that neither the ministry nor and mas s and so result in SCC levels above the milk laboratory considered the regular EU standards. monitoring of milk quality to be one of their responsibili es. Given the importance of Milking prac ce and hygiene standards also milk quality in preparing the dairy sector have a signifi cant eff ect on both SCC & TBC, for EU integra on, and the broad diagnos c and big improvements can be made with value of test results, it is recommended that simple techniques such as udder washing, the ministries in both en es should take a tes ng foremilk with strip cups, stripping out more proac ve role in leading the campaign a er milking, and using disinfectant teat cups to bring milk quality up to EU standards. and sprays. Many projects in the Balkans have provided advice and training on such ma ers, 7.3.3 Factors aff ec ng milk quality but it will probably be the “carrot-and-s ck” of milk premia and penal es that will ul mately In many ways, milk tes ng is the easy part, induce farmers to change their prac ces. and the real challenge for accession countries is how to implement changes in tens or even Milk storage and handling areas hundreds of thousands of dairy farms in order to ensure that they are capable of producing Around a third of small farms store and milk to EU standards. Here the hygiene chain handle their milk close to where the cows are depends on: kept, in breach of a specifi c requirement to have a separate area for milk handling and . Housing and milking areas storage. The most common alterna ve for . Milking technology and hygiene very small farms is to handle milk and wash . Milk storage and handling areas milking equipment in the farm kitchen, which . Milk cooling and transport in principle is capable of achieving adequate hygiene. Housing and milking areas Milk cooling and transport Many cows spend their me lying on soiled bedding or unclean fl oors, crea ng a serious In much of the region, one of the biggest risk of mas s spread and leading to poor problems of milk hygiene has been the hygiene around the udder. Only the largest lack of onfarm milk cooling and insulated farms use cubicle systems designed to keep milk tankers. Here the combined eff orts of the lying areas rela vely clean. dairies, farmers and a succession of diff erent The very large majority of cows are milked projects have had a major impact, providing in the stable itself, in unhygienic condi ons. a combina on of individual and shared Whilst milking in the stable is permi ed in the cooling tanks. The Project Farm Survey found EU, it makes it considerably harder to meet that around 90 percent of surveyed farms the standards for total bacterial count (TBC). supplying milk to dairies had access to some kind of milk cooling, and data from the dairies Milking technology and hygiene themselves confi rms that over 90 percent of their raw milk supply is cooled. The survey of A signifi cant number of cows are s ll milked dairies showed that almost all use hygienic by hand (almost 90 percent of 1–cow farms insulated milk tankers, and it appears only to and over 60 percent of 2–5 cows, according be the local movement of milk by middlemen to the Project Farm Survey) crea ng a high that s ll uses uninsulated churns. risk of milk contamina on and excessive TBC levels, par cularly where milking is carried Thus milk cooling does not appear to be out in the stable. Many of the small and a major obstacle to mee ng EU standards

137 for those farms currently supplying dairies, all dairies larger than four tonnes of milk per though it is possible that some farms are day now have. However, given that the logical eff ec vely forced to process their milk on fi rst Cri cal Control Point for any dairy is to farm due to the absence of facili es for milk measure the quality of raw milk, it is diffi cult cooling and collec on. If such farms did to see how an appropriate HACCP plan can wish to switch to supplying the formal dairy be put into eff ect without regular laboratory system, then milk cooling is one of the many analysis of milk from each supplier. As far areas in which they would need to invest. as milk sourced from the Federa on is concerned, it appears that either the HACCP 7.4 Standards for livestock processors plans themselves are defi cient, or they are 7.4.1 Dairy processors not yet fully being put into eff ect. Final product control Regula on of dairy processors is carried out by the rather complex hierarchy of veterinary Whilst there is insuffi cient laboratory capacity supervision outlined in sec on 5.5, and may for the high-volume tes ng of all raw milk, result in controls being carried out by offi cials tes ng of fi nal products is within the capacity from state, en ty, canton and municipality of exis ng laboratories with their classical inspectorates. methods, and appears to be carried out quite systema cally. Legisla on Inspec on and enforcement There has been some harmoniza on of legisla on in rela on to raw milk quality, There is a widespread opinion that especially in the Republika Srpska. The key enforcement of standards by veterinary issues of HACCP, plant design, and dairy inspectors is sporadic and inconsistent, due product quality, are more in need of improved at least in part to the complex organiza onal implementa on and enforcement, rather structures, and the obvious discrepancies than further legal approxima on. between legisla on and prac ce show that problems exist in this area. Raw milk quality The biggest single problem with food safety 7.4.2 Meat processors and standards in the dairy chain is the lack of Within the visited meat processing plants, laboratory capacity and systems for tes ng both the infrastructure and the opera ng raw milk quality. The Republika Srpska is able procedures were at or close to EU standards. to regularly conduct analyses to EU standards However, the re cence of some operators in its veterinary laboratory in Banja Luka. The to even allow a tour of their slaughtering Federa on has tes ng laboratories in Sarajevo, facili es suggests that there are serious Tuzla and Bihać, which require some upgrading shortcomings in this area. The methods of and procurement of higher standards of tes ng separa ng and handling bovine “specifi ed equipment to handle increased numbers of risk material” could not be ascertained. samples in conformity with EU requirements. Un l this problem is fully addressed the true Environment hygiene posi on of the dairy industry will remain unknown in the Federa on, and many Disposal of dairy waste and processing dairies will be excluded from any possibility of effl uent is a general problem, and new achieving EU export approval. effl uent-treatment facili es will be required to meet EU standards. HACCP and process control Most meat processing plants appear to Na onal legisla on requires all dairies to achieve rela vely safe disposal of their liquid have an approved HACCP plan, which almost effl uent, usually with pre-treatment on-site

138 prior to discharge into the municipal system, from the RS milk-tes ng system show but this may s ll fall short of EU requirements. that considerable progress is being made, with 58 percent of milk in the “Extra” and Rendering and disposal of animal waste from “1st class” bands; however, this represents slaughterhouses is a ma er of considerable only 29 percent of all farms supplying concern within the EU, and exis ng facili es dairies, indica ng that some 70 percent of are completely insuffi cient to comply with (generally small) farms s ll have a way to go EU regula ons. One or two meat plants in achieving EU hygiene standards. render pig fat on a small scale, but there is a great need for the slaughterhouse waste to be Processing level correctly processed to avoid environmental concerns and to ensure appropriate treatment Many of the plants visited were well advanced of bovine specifi ed risk material. in preparing for EU standards, with the main iden fi ed weaknesses being: 7.5 Export to the EU . Slaughtering facili es for red meat; As reported in sec on 5.5 on policy, Bosnia . Disposal of slaughterhouse waste, including and Herzegovina currently has EU export “Specifi ed Risk Material”, with appropriate approval only for four fi sh processing disposal facili es almost completely lacking establishments, and is in the process of in the country; seeking approval for the export of honey. . Disposal of effl uent and contaminated Export of live animals, meat, milk and dairy water from both meat and milk processing; products to the EU is not currently permi ed. . Improving the quality and quality tes ng of The key factor hampering exports has been raw milk, par cularly in FBiH where there the overall structure of the veterinary control is not yet a comprehensive milk tes ng system, as discussed in that chapter, and un l system in place. this country level issue is resolved, no formal assessment of individual plants is likely to Veterinary control and regula on take place. BiH is well advanced in implemen ng EU- 7.6 Conclusions on a ainment of EU compliant systems of animal iden fi ca on, standards and is progressively harmonizing its policies of disease preven on and control with EU Farm level standards. There are three main areas requiring further Whilst considerable progress has been made a en on on livestock farms: in harmonizing legisla on with EU standards, . Environment, primarily storage, handling the approach to legisla on – and par cularly and disposal of manure and slurry; to implementa on and enforcement – is s ll rather piecemeal and inconsistent. . Animal welfare, including design of livestock buildings and the widespread prac ce of The most urgent outstanding issue, as backyard slaughter without prior stunning; discussed in sec on 5.5, is that of improving . Milk hygiene, par cularly improving the the opera on of veterinary structures and physical condi ons of ca le buildings and obtaining EU export approval for livestock areas for milking and milk storage. Data products.

139 140 8. Investment trends and future developments

The sec on examines the investment climate . The large majority of small-scale farms for the livestock sector. opera ng with self-replacing fl ocks and . Sec on 8.1 gives a short impression of herds, old machinery and even older recent investments in livestock produc on buildings, usually able to make investments and processing. in, e.g. a milk cooling tank, only when helped by a project or by their dairy. . Sec on 8.2 presents a comprehensive review of the fi nancial infrastructure in BiH 8.1.2 Investments in processing and of the lending services available to the agri-food sector. The situa on in processing is rather diff erent, . Sec on 8.3 briefl y discusses the level of with many examples of recent investment in public support available to the sector, larger and medium-sized processing plants. through government investment subsidies It was not considered appropriate to ask the and grants. source of funds, but it is clear than many . Sec on 8.4 draws conclusions on the entrepreneurs spent me abroad during the availability of investment funds, and asks war, allowing them to amass both capital whether they will be suffi cient to ensure and contacts. Some of the processing plants adequate co-fi nancing of IPARD grants. visited had used bank loans, but quite a remarkable amount of investment had been 8.1 Recent investments in the achieved with own resources, and the level of livestock sector indebtedness was overall very low. The picture of investment by farms emerges However, dairies have already begun from the “Infrastructure” and “Machinery” preparing for EU accession and taking steps sec ons of the Project Farm Survey, presented that will be necessary in order for them to in sec on 9.4, whilst the situa on in processing secure export licences to the EU before the plants is discussed in Chapter 4 and in the case accession of Bosnia and Herzegovina. Once studies of Annex 4. This sec on therefore gives country level approval for dairy exports is a very brief summary of the situa on. obtained, it will probably be the foreign- owned dairies that will respond the quickest 8.1.1 Investments on farms in mee ng full EU requirements and applying Farm visits indicated three diff erent situa ons for export approval. The most immediate in terms of recent investment: investment needs are likely to be for upgrading of premises and processing plant, . A very small number of completely new farms or livestock enterprises, par cularly with many businesses already in the early large dairy farms established by or with stages of planning for the next fi ve years. support from dairies in order to ensure a Similar comments also apply to meat reliable supply of high quality raw material; processors, and a number are already well . A somewhat larger number of medium-sized advanced in construc ng new premises commercial farms that are progressively prior to securing fi nance for new plant and inves ng and expanding within their technology. Most meat processors are family- fi nancial means: purchasing animals of owned businesses with a sound tradi on in the higher gene c quality, adap ng exis ng industry, and are generally op mis c in their buildings, adding extensions, buying approach to the future. They seem capable individual pieces of machinery as the need of raising investment for capital expenditure and possibility arise – essen ally organic from their own sources, but clearly would wish growth funded by a combina on of retained to avail themselves of new sources that might profi ts and formal and informal loans; arise, including IPARD funding.

141 8.2 The agriculture lending and in 24 municipali es of the Republika Srpska, fi nancial sector in Bosnia 72 percent of respondents said that the and Herzegovina biggest obstacle facing their own business was shortage of funds.43 Lending is certainly Op ons of agricultural development based one of the major sources of fi nancing for on successful management of the available agricultural development, but according to fi xed funds is limited, so that any serious the survey, 55 percent of households had and long-term development is inevitably never used loans, whilst 38 percent had used associated with new investment, for which some form of agricultural loans (10 percent addi onal funds must be provided. Financing for the purchase of ca le, 10 percent for of agricultural produc on, especially on raw materials, 9 percent for purchases of small family farms, was and s ll is a current machinery, 8 percent for the renova on of issue in this region. In the previous socio- buildings and 2 percent for plan ng orchards economic system, agricultural development and vineyards). In general, small- and took place largely through the development medium-sized legal en es and coopera ves of coopera ve rela ons between producers fi nd it somewhat easier to obtain loans. of certain agricultural products and their buyers, collectors and processors. Producers The fi nancial sector in Bosnia and were supplied with the necessary inputs Herzegovina consists of banks, microcredit and services in exchange for raw materials, organiza ons and socie es, savings and eff ec vely providing producers with credit organiza ons, and leasing companies, commodity loans and guarantees. Apart from func oning as important partners for these direct producer-processor rela onships, agricultural producers of all kinds. It has an important media ng role was also played become increasingly common for buyers of by the agricultural coopera ves. certain agricultural products (e.g. milk, fruit and vegetables) to pay direct to the farmers’ With the recent transi on from a planned bank accounts, and the same prac ce applies to a market economy, the integra ng role of for the payment of subsidies by the agriculture coopera ves has been signifi cantly reduced. ministries, cantons and municipali es, so New or priva zed enterprises organize their that an increasing number of agricultural own purchasing of agricultural products, but producers now make their payments through without direct credit arrangements. bank accounts. Some family farms have managed to make investments thanks to dona ons Self-employed individuals, especially farmers, by humanitarian, governmental and non- fi nd it diffi cult to provide loan guarantees and governmental organiza ons. The fi rst forms in most cases have to depend on employed of renewed lending to agriculture began in the rela ves or friends to act as guarantors. late 1990s through micro-credit organiza ons, The increase in credit default and general and later by commercial banks. There were indebtedness has reduced the number of also arrangements in which lending was poten al guarantors, which has made it made by the state, through projects or the more diffi cult to obtain credit. Established relevant ministry.42 registers of borrowers off er one means of effi cient monitoring of the creditworthiness Farmers s ll need addi onal resources to fund of borrowers and credit risk reduc on, and their investments. In a survey of 1,390 rural the RS Guarantee Fund has recently been households in 2008, which was conducted founded and begun to work.

42 Vučenović, A. & Vaško, Ž. – Finansiranje poljoprivrede, Agroznaje, Vol. 10, No.4, 2009. pp 165–174. 43 Data from a survey carried out to support the design of the Republika Srpska Strategic Plan of Rural Development for the period 2009–15, RS Faculty of Agriculture, MAFWM, Banja Luka. 2009.

142 Generally, the agricultural fi nance sector faces also gone down, in 2010 falling by 2 percent the same constraints as in most countries of in RS and 1 percent in the Federa on, whilst in the region, including: the same year deposits in RS fell by 9 percent . the cost and diffi culty of preparing a and in the Federa on increased by 2 percent. business plan, par cularly for operators To alleviate the crisis, the Central Bank of BiH without educa on or experience in this reduced its reserve requirements in order to area; s mulate banks to lend as much as possible of their deposits, and also facilitated condi ons . the lack of audited accounts for small for reprogramming of exis ng loans. businesses, making it hard for them to show a reliable business history; 8.2.1 Financing through commercial . frequent diffi cul es in the opera on of banks collateral, with banks reluctant to accept either farm land or movable assets as There are currently 29 banks licensed in BiH, collateral, and slow and uncertain processes consis ng of both restructured and priva zed for foreclosure and releasing the value of formerly state-owned banks, and newly- mortgaged assets. established banks, mainly subsidiaries of larger and well-known banks from European The economic crisis aff ected the level of and Islamic countries. Some banks have their lending, which decreased by 3.9 percent in headquarters in the Federa on and some in 2009 and rose 3.3 percent in 2010. The default RS, but almost all banks operate across the rate has increased in recent years, so lenders territory of both en es and Brčko District. have increased their provision to cover The current situa on in the banking sector in poten al loan losses. Total bank assets have BiH is summarized in the following table:

Table 8.1: Banks in Bosnia and Herzegovina in 201044 Indicator Unit FBiH RS BiH Number of banks 19 10 29 Number of branches and other organiza onal units 623 384 1,007 Number of employees 7,388 2,933 10,321 Capital mill. KM 1.7 0.7 2.4 Balance asset bill. KM 15.1 5.4 20.5 Deposits bill. KM 112 3.8 15,0 Loans bill. KM 10.0 4.0 14.0 Loan share in assets 66 % 74 % 68 % Loans to enterprises 50 % 50 % 50 % Loans to ci zens 47 % 40 % 45 % Loans to government and other ins tu ons 3 % 10 % 5 % Loans to agriculture mill. KM n.a. 110 - Bank losses mill. KM 102.9 21.3 124.2 Eff ec ve interest rates for short-term loans 8.0 % 9.4 % - Eff ec ve interest rates for long-term loans 8.7 % 9.1 % - Eff ec ve interest rates for short-term deposits 1.3 % 2.4 % - Eff ec ve interest rates for long-term deposits 3.9 % 4.7 % -

44 Izvještaj o stanju u bankarskom sistemu Republike Srpske za period 01.01.2010.–31.12.2010. godine (Report on Banking System Status in RS), Agencija za bankarstvo Republike Srpske, Banja Luka, 2011, and Informacija o bankarskom sistemu Federacije BiH, 31.12.2010. godine, (Report on Banking System Status in FBiH), Agencija za bankarstvo Federacije BiH, Sarajevo, 2011.

143 A er several years of expansion, the global loans from the World Bank (Livestock and economic and fi nancial crisis has le its mark Rural Finance Development Project (LRFDP), on the banking sector in BiH. There was Enhancing SME Access to Finance (EAF SME)) stagna on of their capital and balance sheet and the Interna onal Fund for Agricultural assets, falling profi tability, and increasing Development (LRFDP, Rural Enterprise levels of non-performing assets and loans Enhancement Project (REEP), Rural Livelihood required provisioning on that basis, so that Development Project (RLDP)). banks become more cau ous in gran ng new loans. The number of organiza onal units Eff ec ve interest rates on short-term and the number of employees have been loans range from 8 percent (in FBiH) to reduced, although with some 1,000 branches 9.5 percent (RS), but are higher for individuals currently opera ng in BiH, it can be concluded than for companies, with individuals paying that the availability of banking services to average eff ec ve interest rates on short- individuals and legal en es in BiH is good, term loans of 12.6–13.7 percent, and with an average of one branch to every 4,000 9.510.5 percent on long-term loans. Although inhabitants. detailed data are not available on the structure of deposits, it appears that the rural Companies in 2010 used about half of the popula on and farmers do not contribute total approved loans, and ci zens (including greatly to overall bank deposits. Although farmers) used 40 percent in RS and 47 percent some buyers of agricultural products pay to in FBiH. The loan structure is dominated by the farmer’s bank account, farmers usually long-term loans (> 1 year), which is largely withdraw this money in full immediately used by physical rather than legal en es. a er payment. Agricultural producers are The Banking Agency of RS reported that not “favoured” by banks in terms of lending, loans to the agriculture sector account for because banks consider them as high-risk only 2.8 percent (110 million) of total loans borrowers. Therefore, interest rates on in that en ty; data are not available for FBiH agricultural loans to farmers, which they but it is understood that a similar situa on use as private individuals, are higher than applies throughout BiH. However, some of for other users, and requested guarantees the numerous “consumer loans” may also be are the same, if not even more rigorous. used by farmers to support their businesses. Proper es in rural areas (agricultural land and buildings) are generally not accepted, and the In terms of credit condi ons for companies alterna ve of a personal guarantor is hard for engaged in agricultural produc on and the many farmers to fi nd. As a result, farmers food industry, they generally have the same depend mainly on loans from microcredit treatment as companies from other sectors. organiza ons. The excep ons are the projects In some cases they have even enjoyed men oned above (World Bank and IFAD), slightly more favourable credit condi ons or which have so far provided 12 million loans exclusive access to some of the dedicated to farmers under favourable condi ons. lines of credit secured within project-funded Some examples of typical bank loans available to farmers and SMEs from the sector as of The ongoing World Bank project “Enhancing SME Access to Finance” (EAF SME) has a fund of June 2010 (based on data from the banks’ USD 70 million, and off ers loans for SMEs from websites) are: agro-processing and other industrial sectors. The . NLB Tuzlanska Banka provides loans condi ons of these loans are a loan amount up to (including farmers) up to 50,000 KM for EUR 2.5 million (EUR 400,000 for working capital), a repayment period of up to 10 years, a grace period periods of up to 7 years, with an eff ec ve of up to 3 years, and eff ec ve interest rates of LIBOR interest rate of 12.3 percent; + EUR 4.5 to 5.5 percent (six-month LIBOR plus a . Nova Bank AD Banja Luka provides short- spread, resul ng in 6-7 percent). term loans to individual farmers for

144 procurement of raw materials, agricultural Most of the banks’ loan products are not equipment and spare parts. Loans are for diff eren ated for agricultural loans. They up to 10,000 KM, the repayment period o en have no pre-defi ned condi ons for up to 12 months, the eff ec ve interest rate loans, par cularly in terms of the level 13.2 percent, and guarantors are required of interest rates, which o en depend on (one guarantor for loans of up to 5,000 KM, whether the loan applicant is a client of the and two for loan amounts of 5–10,000 KM). bank, whether the loan is used for the fi rst Long-term loans are available only for the me, what security guarantees the applicant region of Herzegovina, for periods of up can off er, etc. In general, a rela vely small to 10 years and an eff ec ve interest rate number of farmers use bank loans (which of 11.9 percent, though the loan amount is confi rmed by data on the total volume depends on the creditworthiness of the of loans for agriculture), because it can be borrower; diffi cult to meet the required condi ons . BOR bank in FBiH off ers loans for and banks are much more rigorous when export-oriented programmes and the assessing the creditworthiness of this type agroprocessing industry in amounts from of customer. SMEs from the agribusiness 50,000 to 1 million KM, with a repayment sector in terms of credits generally share the period of 8 years, a grace period (for fate and condi on of all other SMEs without agriculture) of up to 3 years, and an eff ec ve any special condi ons, although there are interest rate of 7.0 percent; occasional lines of loans targeted exclusively at SMEs in the agriculture or food industries. . Bobar Bank Bijeljina off ers a specifi c type of loan to farmers for buying tractors, in It has already been noted that signifi cant coopera on with sellers, with a repayment funding has been designated for loans to period of up to 36 months, a mandatory agriculture in BiH, under the special project contribu on of benefi ciaries of 40 percent fund provided by interna onal fi nancial and an eff ec ve interest rate of 12.7 percent. ins tu ons (mainly the World Bank and The same bank approves short-term IFAD), or by dona ons from governments loans to agricultural enterprises up to of various developed countries. One of the 500,000 KM for a period of 12 months and most ac ve in this regard is the Interna onal 12.1 percent eff ec ve interest rate. Loans Fund for Agricultural Development (IFAD) are available for companies to purchase whose projects have so far approved about agricultural machinery, for a period of 5 67 million KM of cash loans for agriculture. years, eff ec ve interest rate of 9.9 percent, and in amounts depending on the needs IFAD project lending and creditworthiness of the borrower; The Interna onal Fund for Agricultural . Bosnia Bank Interna onal Sarajevo has Development in Bosnia and Herzegovina long-term loans for agriculture for physical has implemented fi ve projects since en es (for the purchase of land or 1996. Beginning from 2001, a mandatory agricultural machinery and construc on component of IFAD’s projects was a line or renova on of buildings for agricultural of credit intended for farmers and SMEs purposes) with a term loan of up to 10 engaged in agriculture. These projects work years, in amounts that depend on the equally with fi nancial intermediaries, banks creditworthiness of the borrower, without and microcredit organiza ons. Credit terms of one specifi ed interest rate; the two most important lines of credit under . ProCredit Bank provides loans to farmers the Livestock and Rural Finance Development of up to 50,000 KM for working capital for Project (LRFDP) and the Rural Enterprise up to 24 months, and for fi xed assets for a Enhancement Project (REEP) are summarized period up to 84 months. in the following table:

145 Table 8.2: Credit terms under the LRFDP and REEP LRFDP REEP (2002–08) (2006–12) Farmer credits – through banks Number of banks 9 6 Size of approved credits 10.26 m KM 1.04 m KM Number of approved credits 1,748 163 Credit period up to 5 years up to 5 years Grace period 6–12 months 12–18 months Interest rate 5.8–10.0 % 8.4–8.7 % Farmer credits – through microcredit organiza ons Number of microcredit organiza ons 2 5 Size of approved credits) 7.36 m KM 10.55 m KM Number of approved credits 186 900 Credit period 3–5 years up to 5 years Grace period up to 12 months up to 18 months Interest rate 13–18 % 8–18 % Agricultural SME credits – through banks Number of banks 8 6 Size of approved credits (million KM) 5.07 m KM 2.21 m KM Number of approved credits 107 26 Credit period up to 5 years up to 7 years Grace period 12–18 months 12–24 months Interest rate 5.7–6.3 % 8.3–8.7 % Agricultural SME credits – through microcredit organiza ons Number of microcredit organiza ons 2 5 Size of approved credits (million KM) 1.06 m KM 0.44 m KM Number of approved credits 422 29 Credit period 3–5 years up to 7 years Grace period up to 12 months up to 24 months Interest rate 13–18 % 8.2–12.5 %

8.2.2 Lending through microcredit loans to approximately 20,000 customers. organiza ons and companies According to the assessment of interna onal microfi nance sector professionals, the MCO Microcredit organiza ons (MCOs) are sector in BiH has become one of the largest in rela vely recent in BiH. All MCOs have been Eastern Europe and is fi nancially sustainable, established, as founda ons or companies, although it operates in a compe ve in the post-war period, largely thanks environment.45 The primary ac vity of MCOs to help from interna onal fi nancial and is providing loans. A summary of the status humanitarian organiza ons. For example, and opera ons of the microfi nance sector just one project (the World Bank fi nanced in BiH at the end of 2010 is shown in the “Local Ini a ve Project I” has granted 50,261 following table:

45 Welle-Strand, Anne; Kjollesdal K. & Si er, N. – Accessing Microﬁ nance: The Bosnia and Herzegovina Case, Managing Global Transi on 8 (2), pp 145–166.

146 Table 8.3: Review of MCOs in BiH in 201046

Indicator unit FBiH RS BiH Number of MCOs 18 7 25 Microcredit socie es 134 Microcredit funds 17 4 21 Number of branches 362 61 423 Number of employees 1,522 380 1,902 Capital assets mil. KM 142 60 202 Balance assets mil. KM 576 280 856 Reserves for credit and other losses mil. KM 36 7,4 43,4 Credit share in assets % 71.2% 81.8% Approved credits mil. KM 460 229 689 Credits to enterprises % 1.7% 6.8% Credits to ci zens % 98.3% 93.2% Credits to agriculture 33.1% 32.9% Profi t/loss of MCO mil. KM -10.86 +1.47 -9.39 Weighted eff ec ve interest rate for short-term credit 32.6% 239% for agriculture 33.0% Weighted eff ec ve interest rate for long-term credit 29.0% 20.1% for agriculture 25.0%

At the end of 2010, BiH had 25 MCOs, though MCO remains at about the same level of one was in the process of closure. The one third, the absolute amount of loans for microcredit sector showed a loss in 2010, agriculture is considerably smaller (55 million although lower than in 2009, and the sector lower loans in 2010, of which 49 million in noted some improvement of key indicators FBiH and 6 million in RS). during 2010 as a result of enforcement of its Interest rates for agriculture in the MCO are restructuring and consolida on. The results rela vely high and they have increased in of these measures have been the downsizing recent mes. In the RS, no data are available and closure of a number of organiza onal units on the interest rates for the agricultural and fi eld offi ces of the MCOs, so that they are sector, only generally for all sectors, whilst in now in some parts less physically accessible FBiH the weighted average eff ec ve interest to users, especially those in underdeveloped rates for agriculture in 2010 were 33 percent and rural areas. During 2010, there was a for long-term loans and 25 percent for short- decrease in MCO loans of 27 percent in FBiH term loans (an unusual reversal of the usual and 15 percent in RS, which is largely a result situa on where short-term interest rates of the economic crisis and ghter lending are generally higher than long-term rates). policies due to the signifi cant increase in Interest rates on microcredits are typically the number and value of risky loans in the around 9 percent higher in FBiH than in RS. previous period. Although the rela ve share Due to the many barriers that farmers face in of agriculture in total credit available to the trying to access bank loans, virtually the only

46 Izvještaj o stanju u bankarskom sistemu Republike Srpske za period 01.01.2010.–31.12.2010.godine, Agencija za bankarstvo Republike Srpske, Banja Luka. 2011. (Report on Banking System Status in RS) and Informacija o mikrokreditnom sistemu Federacije Bosne i Hercegovine sa stanjem na dan 31.12.2010. godine, (Report on Banking System Status in FBiH), Agencija za bankarstvo FBiH, Sarajevo. 2011.

147 loan source that they have are the MCOs. The that provides loans for up to 7 years with a total value of agriculture sector lending by grace period of up to 2 years and a 3.3 percent MCOs in BiH is between 200 and 300 million eff ec ve interest rate, with a maximum loan per year. However, the scope for MCOs to amount of 10.000 KM per newly employed provide co-fi nancing for IPARD grants may be worker in agriculture produc on. constrained by the legal limits on maximum loan size: up to a maximum of 50,000 KM for The Investment Development Bank (IDB) of microcredit companies and just 10,000 KM Republika Srpska eff ec vely operates as a for microcredit founda ons.47 fund, because it does not distribute loans to customers directly but works through banks 8.2.3 Lending through savings and and microcredit organiza ons with which credit organiza ons it has signed agreements (including almost all banks and MCOs based in RS). IDB has There are just three savings and credit nine loan lines, of which two are exclusively organiza ons in Republika Srpska and none in intended for agriculture: a credit line for FBiH, where the legal framework is not yet in microbusiness in agriculture and a credit line place. All three were established in 2008 as a for agriculture itself. result of pilot ac vi es under IFAD’s “Livestock and Rural Finance Development Project”. Their The condi ons of lending (which must be balance sheet is constantly decreasing, and at accepted by all intermediaries who use IDB the end of 2010 it amounted to 430,000 KM. funds) for microbusiness in agriculture are: These organiza ons are of a local character . Benefi ciaries: Persons registered in the and operate mainly in the municipali es Farm Register; of Derventa, Srbac and Berkovići. These organiza ons have established their capital on . Purpose: Procurement of fi xed and current the basis of dona ons and from their members, assets; but never managed to a ract signifi cant . Loan amount: 5–50,000 KM; savings. They extend loans at more favourable . Repayment period: Up to 10 years; terms than banks and MCOs (lower interest . Grace period: Up to 36 months; rates and fl exible terms of guarantee), but . Interest rate: Basic interest rate of their credit poten al is limited and therefore 5.9 percent (5.4 percent for underdeveloped they only approve loans of smaller amounts municipali es and 5.6 percent for members and for shorter terms. Most of their lending of clusters). is for agricultural ac vi es, but due to their limited funds their eff ect on the credit market The condi ons for loans to agriculture are: in BiH is minor. . Benefi ciaries: Legal en es and individuals RS Investment Development Bank and FBiH engaged in produc on or processing of Development Bank agriculture or aquaculture; . Purpose: Procurement of fi xed and current The Development Bank of the Federa on assets; refi nancing of exis ng obliga ons; provides, directly or through commercial banks, so loans for all types of entrepreneurs . Loan amount: (legal or physical persons), including farmers. • Legal en es: 30,000–5,000,000 KM for It provides long-term loans to fi nance fi xed assets and 10,0002,000,000 KM for agricultural produc on, with a repayment current assets period of 210 years and an eff ec ve interest • Physical persons: 5,000–500,000 KM for rate of 4.3 percent. This bank has a credit line fi xed assets and 5,000–100,000 KM for to encourage new employment, and within current assets;

47 Ar cle 4. of the Law on MCOs of RS, Sl. glasnik RS 64/06 and Ar cle 4. the Law on MCOs of FBiH, Sl. novine FBiH 59/06.

148 . Repayment period: Up to 15 years for fi xed to 8 years with a grace period of up to 12 assets and up to 5 years for current assets; months, nominal interest rate of 6–8 percent . Grace period: Up to 36 months for fi xed +1 percent fee for loan processing. The main assets and 12 months for current assets; restric on is that this fund has rela vely modest resources available: 2.5 million KM in . Interest rates: Basic interest rate of 5.1 percent (4.6 percent for underdeveloped 2011. municipali es and 4.8 percent for members 8.2.4 Guarantee Funds of clusters). There are several guarantee funds in BiH, Although disbursement under these lines which generally provide their services to has been lower than planned, they have s ll entrepreneurs and companies involved in been quite signifi cant, lending 66 million KM agricultural produc on or processing of in three years. The scope of loans is shown in agricultural products. These include the the Table 8.4. Guarantee Fund Brčko District (GFBD), the The annual scope of agricultural loans funded USAID Guarantee Fund, the Credit Guarantee by the Investment Development Bank has Fund of the Associa on for Business and been from 15–30 million. Due to limited Enterprise– LINK, Mostar, the Guarantee margins for intermediary fi nancial ins tu ons, Fund of the Republika Srpska. Most of these most of these funds were disbursed through funds operate as loan guarantee funds and banks and just a small part through the MCOs, apply condi ons similar to those imposed by who have aspira ons for higher margins than other fi nancial ins tu ons such as banks and allowed by the IDB. microcredit organiza ons. All of these funds, with the excep on of the RS Guarantee Fund, Besides the two described loan lines to have modest capital and so their ac ons are enterprises in primary agricultural produc on generally limited to one municipality or to a and food industry in the RS, there are also specifi c small target group such as start-ups, available credit lines for: the ini al business women, entrepreneurs, etc. ac vi es of entrepreneurs and companies, to purchase receivables, and for SMEs from the The RS Guarantee Fund was established EAF project (Enhancing Access to Finance for in 2010 with a capital of 30 million KM. SMEs project). This guarantee fund emphasizes lending to agriculture as one of its objec ves and The RS Ministry of Agriculture, Forestry priori es. Two of its fi ve guarantee credit and Water Management established a lines are specifi cally for agriculture (one for counterpart loan fund based on commodity individual farms and one for agribusiness loans from dona ons by the Japanese SMEs). The fund guarantees loans to farmers Government under its “2KR” project). Loans and SMEs to provide working capital or are disbursed through several banks in RS, investment in fi xed assets, up to a maximum at very favourable terms: loan amounts of of 50 percent of the total loan amount. 50–500,000 KM, repayment periods of up The charge for this guarantee service is Table 8.4: Disbursement of loans for microbusiness in agriculture and for agriculture Loan line for microbusiness Loan line for agriculture Total Year in agriculture Applica ons KM Applica ons KM Applica ons KM 2008 187 3,465,809 21 16,402,860 208 19,868,669 2009 370 6,317,264 38 24,291,000 408 30,608,264 2010 251 4,733,068 21 10,957,500 272 15,690,568 2008–10 808 14,516,141 80 51,651,360 888 66,167,501

149 1.05–1.15 percent of the total loan amount. the volume of leasing receivables approved in Like the RS Investment Development Bank, 2010, 245 million KM. The structure of leased the fund has set maximum fi nal interest assets is dominated by cars and vehicles rates which banks and MCOs can charge (52 percent), followed by machinery and to loan benefi ciaries who use guarantees equipment (33 percent), and then real estate (5.55.9 percent for benefi ciaries of agricultural (15 percent). About 10 percent of users loans), which may act to restrict the poten al are physical persons, and 90 percent legal number of users of these guarantees. en es. The weighted average interest rates depend on the subject of leasing, and in 2010 The fund is s ll at the beginning of its opera on have usually ranged from 10–12 percent. and its short history is not yet suffi cient to gauge its eff ec veness. The fund has signed Within the agricultural sector, leasing services agreements with most of the banks and are much more important for companies MCOs which operate in RS. Although some carrying out primary agricultural produc on experts have suggested the establishment and food processing, and rela vely minor for of a dedicated agrarian guarantee fund, farmers and individual entrepreneurs with the ini al idea is to focus on establishing the status of physical en es. a universal credit guarantee fund for all ac vi es, so there is a risk that agriculture 8.3 Public support to the livestock will play just a marginal role within the fund’s sector overall por olio, leaving the problems of the The range of support measures off ered to agriculture sector largely unaddressed. farmers and agro-processors is discussed in 8.2.5 Leasing48 sec on 5.3. Most of this support is linked to current produc on rather than investment, In Bosnia and Herzegovina, leasing services with the principal excep on being subsidies are provided in accordance with the for the purchase of breeding livestock. respec ve laws on leasing of FBiH and of RS. Currently eight companies off er leasing, all Within FBiH, many of the cantons do provide are registered in the Federa on and have 28 some grants for capital investment, but the branches in FBiH and 7 subsidiaries in RS. The majority of these target the crop sector, one RS-based leasing company that used to covering items such as greenhouses and operate has since been liquidated. Leasing irriga on systems. Only two cantons, ZE-DOK showed considerable ini al growth and and SK, have specifi c measures for investment reached a peak in 2006–08, un l the global in the livestock sector, with total expenditure economic and fi nancial crisis struck. In 2009 in 2008 of just under 700,000 KM, half of it there was a signifi cant drop in the amount of for buildings and half for milking equipment. new leasing, though there was slight recovery Such investment is clearly very small in in 2010. rela on to the needs. In 2009, the leasing sector in BiH had a loss Similar schemes exist in RS, where the of 102 million KM, which was more than its government subsidizes capital investment total capital, though this was largely due to in agriculture from the budget allocated to the bad performance of the largest leasing the Ministry of Agriculture, Forestry and company. Total lease write-off s in that year Water Management, with 10 million KM spent alone were 158 million KM. The total assets for this purpose in 2010. The RS ministry of of leasing companies in 2010 were 1.1 billion agriculture off ers 40 percent subsidies for KM in FBiH and 80 million KM in RS. The procurement of new agricultural machinery, number of ac ve contracts was 5,566, and including combine harvesters, tractors and

48 Informacija o sektoru lizinga u Federaciji BiH, Agencija za bankarstvo Federacije BiH, Sarajevo. 2011. (Informa on on the leasing sector in FBiH).

150 implements; milking machines; and newly Experience from other countries shows that constructed barns for cows, sheep and other the large majority of IPARD grants are made kinds of livestock. The government also to large farms and agro-processors, o en provides subsidies of 300 KM/head for the structured as companies, though it is not purchase of pregnant heifers (for a minimum clear to what extent the shortage of fi nance herd of 5 cows) and 100 KM/head for pregnant was one of the barriers to smaller applicants. sows (minimum herd of 20 sows). Within BiH, stakeholder interviews indicate that large farms and processors probably do In 2010 approval was given for 3,924 have suffi cient access to fi nancing to allow applica ons for machinery, 487 for livestock eff ec ve opera on of IPARD, par cularly if buildings, 267 for milking machines, 48 for the various state and interna onally funded heifers and 7 for sows. This direct subsidizing development funds discussed above are of investment in agriculture is in accordance involved in the IPARD planning process and with the long-term goals set out in the encouraged to off er appropriate products. strategic documents of the RS government. Further development of specifi c credit products 8.4 Conclusions on the availability of adapted to the needs of IPARD co-fi nancing investment funds should be priority for governments, responsible ministries and fi nancial intermediaries in BiH. Credit is clearly a signifi cant constraint for However, the massive need for investment the livestock sector, par cularly for the small in private farms and small-scale businesses private farms that dominate the sector in remains largely unreached by either current every area except broiler produc on. A key credit structures or the an cipated IPARD ques on for this study is whether suffi cient programme, and will require determined and co-fi nancing will be available to allow eff ec ve targeted ac on if the country is to achieve the implementa on of the IPARD programme. strategic goals it has set for the sector.

151 152 9. Iden ﬁ ca on of poten al and needs of the sector

This chapter examines the strengths and Project surveys weaknesses of the livestock sector and the opportuni es and threats facing both producers The next step was to collect structured data and processors, and builds on these to iden fy on infrastructure and investment needs, the kinds and level of investment needed: through structured surveys covering: . 121 livestock farms . Sec on 9.1 outlines the consulta on process employed. . 13 dairies . Sec on 9.2 summarizes the results of the . 6 slaughterhouses and meat processors SWOT workshops held in Sarajevo and Expert discussion and analysis Banja Luka. . Sec on 9.3 presents a synthesized picture The fi nal step was to discuss these fi ndings of the strengths, weaknesses, opportuni es with experts, compare them with published and threats aff ec ng specifi cally the dairy reports, and draw addi onal conclusions processing industry, drawn up by the from the project’s extensive data analysis. processing consultant at the end of his 9.2 Strengths, Weaknesses, missions. Opportuni es and Threats . Sec on 9.4 presents the fi ndings of the Project Farm Survey concerning the current (SWOT) workshops condi on of infrastructure on diff erent Two stakeholder SWOT workshops were kinds of livestock farm. held, one in Sarajevo and one in Banja Luka, . Sec on 9.5 brings together the fi ndings and at each workshop the par cipants were of this and earlier chapters to give a short divided into two groups, to focus on either analysis of how EU integra on is likely to meat or milk. Many similar points were made impact on diff erent types of farms and in both en es and for both subsectors, so processors. the composite conclusions are presented . Sec on 9.6 draws conclusions on below, grouped under the main themes that the principal investment needs and emerged in the discussions: priori es, which form the basis of the . Farms recommenda ons in sec on 11.2. . Processing 9.1 Methodology . Markets . Finance The key task of iden fying the poten al and . Ins tu ons needs of the sector was carried out in three sequen al steps. . Policy . Other SWOT workshops It should be noted that this sec on (9.2) simply The fi rst step was to conduct two stakeholder presents a compila on of the views expressed workshops, one in Sarajevo and one in by stakeholders in the SWOT workshops, Banja Luka, to collect par cipants’ opinions including some confl ic ng views of diff erent of the main strengths, weaknesses, par cipants. Later sec ons of this chapter opportuni es and threats, and to iden fy bring in addi onal sources of informa on issues for further inves ga on during the and the consultant’s own observa ons and study. At each workshop the par cipants experience, to develop overall conclusions on divided into two groups, to focus on either the main opportuni es and challenges facing meat or milk, and the results for each sector farmers and processors (sec on 9.5) and their have been brought together below. priority needs for investment (sec on 9.6).

153 The full results of the workshops, by en ty Policy strengths and subsector, are included in Annex 2. . Stable and rela vely high milk subsidies. 9.2.1 Strengths Other strengths Farm level strengths . Clean (unpolluted) natural environment. . Good natural condi ons, including pastures . Favourable geographical posi on (both for grazing ruminants, leading in par cular micro and macro loca on). to cheaper produc on of sheep meat. . Established capacity for both meat and milk 9.2.2 Weaknesses produc on, including buildings, machinery Farm level weaknesses and established herds. . Large amount of available labour, in part . Gene c material was generally seen as a due to the lack of alterna ve employment problem, par cularly in pig produc on, with op ons in rural areas. many widely used breeds not well suited to . Long tradi on in livestock produc on, with meat produc on. a good level of knowledge of producers and . Weaknesses throughout the chain in health, a number of well-established tradi onal hygiene, animal welfare, environmental dairy products. management and traceability, with low . Par cularly high level of knowledge, producer knowledge on many of these equipment and achievements in poultry issues. produc on, coupled with good gene c . Dominated by large numbers of farms that poten al of broiler stock. are very small in both area and number of . Generally good gene c quality of cows, as livestock, and usually fragmented into many a consequence of large imports of breeding small land parcels; scope for expansion and heifers a er the war. increased forage produc on is strongly limited by the shortage of available land. . Milk produc on makes a suffi cient contribu on to household income to keep . Tradi onal a tude to produc on, including producers well mo vated. gender roles, with a low level of technical knowledge, rather extensive produc on, Processing strengths and li le awareness of how breeding, . Considerable installed capacity in meat feeding and health control can improve and milk processing, able to process both produc vity; animal feeding is a notable current and likely future quan es of weak point. product, manned by skilled staff . . Ageing and rela vely uneducated farming . Tradi on in processing of both meat and popula on, with few young people milk, with several well-recognized brands of interested in making a career in farming. meat and dairy products on the market. . Poorly equipped farms, with inadequate . A good network of milk collec on points, livestock buildings and li le specialized backed by rela vely regular and stable machinery such as silos, combines, hay payment to producers, ensures stability of balers and slurry tankers. milk supply. . Slaughtering of young categories of livestock, reducing total meat output below Market strengths its poten al. . The dairy sector is quite oriented towards . Lack of fa ening capacity and a limited level export and has economic power in the region. of technology in much broiler produc on . Rela vely good milk price (albeit lower than (contradicts one of the strengths iden fi ed in Croa a and the EU). above).

154 . Unused natural resources (though the farmers struggle to meet the requirements availability of such resources was iden fi ed for collateral, farm registra on, and farm as a strength). accounts. . Poor meat produc vity and low milk yields, Ins tu onal weaknesses exacerbated in many cases by a poor breed structure. . Poor func oning of the breeding-selec on . High prices of raw materials such as maize service, border inspec on posts and and concentrated feed. laboratories. . In direct contrast to the earlier comment . Lack of registers and animal iden fi ca on. that milk producers are well mo vated, it . Li le organiza on of producers, with weak was also said that many livestock farmers farmers’ associa ons. are not really focussed on their produc on, . Shortage of specialist agricultural schools which is a necessity rather than a choice un l and facili es for training and extension. they fi nd some other kind of employment. . Inadequate animal health protec on Processing weaknesses Policy weaknesses . Inadequate health and hygiene control . Poor alloca on of concessions to use state- along the whole meat processing chain. owned agricultural land (in later discussions . Poor process control and limited innova on. and farm visits, several stakeholders alleged . Poor traceability, in processing as well as in that corrup on was common in this area). primary produc on. . No support for young farmers. . Poor fi nancial results because of the low . No clear strategy for commodity reserves. level of u liza on of processing capacity . Weak coopera on between farmers’ (the availability of spare capacity was noted associa ons and the agriculture ministries. above as a strength). . Agricultural policy in Bosnia and Herzegovina . Unsolved problem of dealing with animal has a social rather than development waste, with no rendering facili es. character. . Variable quality of raw milk, and high cost of milk collec on as tankers have to collect Other weaknesses small quan es from many farms and . Poor demographic picture (i.e. ageing collec on centres, and transport them long popula on) in rural areas, leading to a distances along bad roads. shortage of labour (though the availability Market weaknesses of labour was also noted as a strength). . Poorly organized market with weak linkages . Poorly developed physical infrastructure. between meat and milk processors and . Lack of water. their farm suppliers. . Poor botanical structure of meadows. . Uncontrolled imports. 9.2.3 Opportuni es . Dairy product exports are focussed almost exclusively on the Croa an market. Farm level opportuni es . Limited range of dairy products and limited . The picture presented in the strengths and marke ng skills. weaknesses listed above is generally one . Considerable investment will be needed to of unfulfi lled poten al, and many of the improve milk transport and tes ng. opportuni es seen for the sector consist Finance weaknesses of taking up that poten al through ac ons such as bringing uncul vated land into . Diffi cul es in accessing credit, as many produc on to increase the fodder supply,

155 improving feeding systems, and improving . Increased coopera on of small producers, gene c quality through be er ar fi cial which could include forma on of an insemina on services, all supported by agricultural chamber. knowledge-transfer through extension, educa on and training. Policy opportuni es . Enlargement of holdings and herds to . BiH’s progress in European integra on, increase scale along with produc vity. leading eventually to EU accession. . The resul ng increases in produc on would . Introduc on of law on SEUROPE standard spread fi xed costs across more output, (pig produc on). lower unit costs, and allow BiH producers to . Par cipa on in renewable energy sources be more compe ve. (methane genera on from animal waste). . Sector specifi c opportuni es include . Subsidies in livestock produc on could be contracted broiler produc on, more reformed and made more eff ec ve. specializa on in milk produc on to develop . “Road map”. a full- me stable income, and adding value through on-farm milk processing, Other opportuni es par cularly into indigenous products such . Land consolida on (by sugges on/ as kajmak and tradi onal cheeses. incen ves and by penal es). . Ecological/organic produc on and processing. . Unifying the quality of agricultural products. . Some farmers saw scope for an increase in the rather variable milk price. 9.2.4 Threats Processing opportuni es Farm level threats . Bringing unused exis ng capacity into . Livestock diseases. opera on and increasing the quan es of . High and rising price of inputs in livestock meat and milk processed. produc on. . Linking livestock produc on with other . Vaccina on against Classical Swine Fever ac vi es such as tourism, gastronomy or poses a barrier to expor ng. bioenergy. . Delayed payment for collected milk. Market opportuni es Processing threats . Trend of increasing consump on of milk . Possible failure to meet EU standards. and dairy products. . Unstable milk collec on (some dairies stop . Mul lateral agreements and increased or reduce milk collec on out of season). access to EU markets, crea ng new export opportuni es par cularly for dairy products. Market threats

Finance opportuni es . CEFTA agreement increases compe on from cheap imports, seen as being . Access to IPARD and other development supported by an “import lobby”. funds (investment grants). . Croa a’s accession to the EU will create . Improving and increasingly applying many new barriers in accessing the largest entrepreneurial knowledge and skills (cost current export market, and the rela vely management, management). accessible CEFTA market will con nue to shrink as other countries join the EU. Ins tu onal opportuni es . Bilateral and mul lateral agreements on . Implementa on of numerous interna onal the recogni on of standards could make projects in the ﬁ eld of livestock produc on. imports easier and/or exports more diﬃ cult.

156 . Increasing supermarket power and the . Implementa on of EU standards. move to contracted produc on (which . Lack of a long-term strategy for development tends to exclude the smaller farmers). of the sector . Frequent varia on in milk prices. . Poli cians not understanding needs. Finance threats . Low milk price (lower than in Croa a and EU). . The demanding procedures to access IPARD funds may delay start of the programme . Tax policy (introducing VAT on raw and restrict the number of operators who materials). can benefi t from them. . Dairies’ monopoly. . Unfavourable lending policy, with high . Lack of goat produc on incen ves (due to interest rates and complex administra ve that there is li le goats’ milk). requirements to obtain credit. . BiH’s entry into the EU (which producers . Opera ons of the en es’ development lose and which benefi t). funds (through the RS and FBiH development banks) were seen as threats by some Other threats stakeholders. . Corrup on. Ins tu onal threats . Minefi elds. . Complicated, long and expensive procedure . Presence of the grey economy. to obtain a construc on permit for livestock . Non-existence of “knowledge services” for buildings. accession. . Bad administra ve system and poor . Undeveloped infrastructure (water/roads/ func oning of ins tu ons at the BiH level. electricity). . Poor system for ensuring food quality and . Lack of local patrio sm (in food buying). safety. . Climate change (less rain, higher average . Poor and expensive veterinary services temperature). (even though they have been priva zed). . More costly animal fodder and other raw . Shortage of ins tu ons for quality control materials (fuel). of milk products. . Pollu on of environment (water, soil, air). . Shortage of standards cer fying ins tu ons. . Zoonoses (animal diseases). Policy threats . Poor quality of semen for ar fi cial . Outstanding legisla on rela ng to the insemina on. conversion of agricultural land and to land . Natural disasters (drought, hail, fl oods) and inheritance, and incomplete land res tu on. their infl uence on feed prices. . Poli cal instability, uncertainty and the . Complicated procedures for issuing many unresolved long-term issues. construc on, ecological and other . Undefi ned strategic direc on in produc on, permissions. with no clear policy as to what farmers should produce. 9.3 SWOT analysis of dairy processors . Unclear ownership rela ons on land. The following list of key strengths, . State policy towards livestock produc on weaknesses, opportuni es and threats and processing was seen as unclear and/or aff ec ng dairy processors was drawn up by inadequate. the processing experts a er par cipa ng . Inadequate budget for subsidies and in the SWOT workshops and comple ng his policies. visits, case studies and desk research:

157 Strengths . Lack of technical training for future industry employees . Well managed and organized . . Aware of EU regula ons and standards Poor implementa on of exis ng legisla on . . Implemen ng gradually EU standards Poor communica on between the industry and government and vice versa . Earned HACCP and relevant ISO cer fi ca on . Reduc on of exports to CEFTA when the . Good rela onships with milk producers border with Croa a is closed a er their . Technologically up-to-date expected accession . Good packaging . Con nued lack of support to exporters . High hygienic standards . Failure of government to pay milk subsidy . 95percent of milk is cooled prior to promptly to producers recep on at dairies . Deteriora on of global economic situa on . A raw milk quality improvement scheme is in place in some dairies 9.4 Infrastructure on livestock farms . Low levels of outstanding credit The Project Farm Survey provided a detailed . Sound understanding of the local market and structured assessment of the state Weaknesses of infrastructure on 112 livestock farms, covering almost every one of the farm types . Many small milk producers – about 3 cows iden fi ed in Chapter 3. per farm The most important fi ndings are summarized . Reportedly insuffi cient raw milk to sa sfy demand here, together with short notes explaining the signifi cance of each observa on (shown . Many dairies compe ng for dispersed milk a er the  arrow): supplies leads to high costs of collec on . Fragmented approach to milk quality 9.4.1 Infrastructure on ca le farms improvement . Large farms house cows all year and depend . Cash fl ow problems caused by demand on carried forage  Lost advantages of from retailers for extensive credit – o en grazing more than 90 days . Most small and medium farms tether . Dairies operate mainly below installed cows, some mes all day  Animal welfare capacity problem Opportuni es . Many small and medium farms need . Product development into higher profi t building repairs  Hygiene problem and lines, par cularly of longer shelf-life investment need . Con nued training of milk producers . Smallest farms give water in buckets  Risk of restric ng output . Strengthen the scope of dairy processors associa on to include establishing an . 60 percent of feed stores need improvement industry training centre and partake in the  Probable wastage harmoniza on of dairy legisla on . 75 percent of manure stores need . Ra onaliza on of milk collec on routes improvement  Environmental problem . Improved use of by-products such as . 88 percent of 1-cow farms and 63 percent skimmed milk and cheese whey of 2–5 cows milk by hand; 38 percent of 620 cow farms use inadequate milking machines Threats  TBC and SCC problem . Lack of clear strategy or policy for agriculture . 10 percent of farms have no milk cooling  in general and for milk in par cular TBC problem

158 . Many small farms store milk near cows  . Automated feeding Non-compliant with EU . Manure storage . 62 percent of farms need to improve milking + expansion of all facili es (and pigs) to equipment  Investment need increase herd size Main investment needs 9.4.4 Infrastructure on poultry farms . Buildings . All large laying farms use cages  Animal . Milking machines and cooling tanks welfare issue . Manure storage . Most buildings (especially on large farms) . Machinery for producing and handling forage need only minor or no improvement + expansion of all facili es (and cows) to . Many farms use manual ven la on increase herd size . Most farms have no hea ng systems 9.4.2 Infrastructure on sheep farms . Many farms use manual feeding . 80 percent of feed stores need some . Most house in winter only improvement . 90 percent of buildings need some . 70 percent of manure stores need some improvement improvement . Many small farms give water in buckets Main investment needs . 85 percent of feed stores need some improvement . Adding automated feeding and climate . 79 percent of manure stores need control to exis ng buildings improvement (but less pollu on risk than . Minor or major improvements to buildings other species) and feed stores . 85 percent of farms shear by hand . Manure storage Main investment needs 9.5 The implica ons of EU integra on . Buildings (fairly basic) for farms and processors . Shearing equipment (not expensive) EU integra on will impact diff erently on . Expansion depends mainly on land and diff erent types and sizes of livestock farms; animals this sec on gives a brief indica on of how 9.4.3 Infrastructure on pig farms each of the farm types iden fi ed in Chapter 3 is likely to be aff ected. . 18 percent of farms use some grazing/free- range 9.5.1 Ca le . 74 percent of buildings need minor or major It is a reasonable simplifi ca on to say that the improvement EU treats milk as food as soon as it is drawn . Many farms use manual feeding  Less from the cow on the farm, whereas meat only precise control of most expensive input becomes food in the slaughterhouse. Thus a . 76 percent of feed stores need some dairy farm is a food producing establishment, improvement whilst a beef (or sheep, or pig, or broiler) . 52 percent of manure stores need major farm provides raw material for the food improvement or replacement  Serious industry. Therefore dairy farms are subject to environmental problem much ghter hygiene standards than other kinds of livestock farms, and consequently Main investment needs most accession countries have found that . Buildings preparing their dairy sector has been one of

159 the most demanding aspects of the en re milk of EU quality. This is one of the main accession process. factors underlying the following prognosis. The challenge will be par cularly acute for Dairy, house cow Bosnia and Herzegovina due to the very small This farm type, which accounts for around size structure of its farms, since there is a 63 percent of all ca le farms and 46 percent clear correla on between herd size and milk of all cows, is rela vely immune to the quality (Graph 9.1). challenges of EU legisla on, since it is oriented Of the 1,500 one-cow farms in RS supplying primarily to supplying the farm family rather milk to dairies in October 2010, only 10 the market. The milk-tes ng data presented percent managed to meet EU milk hygiene above indicate that only around 3 percent standards, and at least half were in the lowest of “house cow” holdings in RS supply milk quality band, Class IV. Quality increases directly to dairies (though there may also be progressively with herd size, by the me some informal collec on through 1-cow herds herds exceed 20 cows, some 57 percent of that deliver their milk to a large neighbour for them meet EU standards and three-quarters collec on); most of these could probably fi nd are either in this or the next band, Class 1. In other ways of using their milk without too that month only eight farms in RS provided much diffi culty. dairies with milk from more than 50 cows, With no species-specifi c animal welfare so the columns to the right of the chart each legisla on to meet, and very small quan es represent very small numbers of farms, but of manure, the main EU obliga ons on do indicate that large farms are already at or these farms will be to comply with animal close to EU standards for milk quality. iden fi ca on and regular animal health measures such as brucellosis tes ng, neither Unfortunately for Bosnia and Herzegovina, of which is par cularly onerous for the farmer. farms with up to 20 cows provide around 80 percent of the milk supply to dairies49 yet Thus these farms are likely to con nue in only 15 percent of them manage to deliver opera on more or less as they are now, un l

Graph 9.1: Milk quality versus herd size

Source: RS ministry of agriculture, data for milk subsidy paid in October 2010

49 In this par cular snapshot of RS, farms of 1–20 cows provided 79 percent of the supply to dairies. Across the year and for all of BiH, this share is es mated at 86 percent (see sec on 3.3.4).

160 the farming family decides that it has be er 2. To cease supplying dairies and switch things to do with its me and switches to to on-farm processing for local sale and buying its milk and dairy products. This change green markets. This will remain subject will largely be driven by non-agricultural factors to na onal rather than EU legisla on and of employment and income, and in many hence need not be so demanding; cases the younger genera on will migrate to 3. To stop producing milk and switch to beef the towns in search of work and the tradi onal produc on, where hygiene standards are “house cow” will gradually decline as the much less of an issue; current genera on of small farmers ages. 4. To get out of ca le produc on en rely and 9.5.1.1. Dairy, small dairy farm switch to some other form of economic ac vity, agricultural or otherwise. These 2–5 cow farms account for around 22 percent of ca le farms, 39 percent of In prac ce a propor on of the 35,000 “small cows, and 40–60 percent of the milk supply dairy farms” will choose each of these four to dairies50 – and form the most vulnerable routes, and most of those that choose the group of all the ca le farms. The quan ty of “upgrade and enlarge” route will move up milk produced on these holdings is too much a size category to become “medium dairy for household use, and the main purpose of farms”. Thus the overall outcome for this farm milk produc on is to generate a cash income, type is likely to involve a considerably smaller so the milk must be sold. These farms are number of somewhat larger farms supplying s ll far from mee ng EU hygiene standards, dairies, with the total milk supply to dairies with less than 15 percent of them currently from this group signifi cantly reduced, but par ally off set by expansion of the next size producing EU-grade milk, yet they provide 51 around half of the dairies’ milk supply and group up. so simply excluding them from the system In policy terms, there are three ac ons would cause a na onal shortage of milk that government can take to help this most for processing, as well as endangering the vulnerable group: livelihoods of some 35,000 farming families. 1. Provide good informa on and advice, so The real problem is that there are dis nct that farmers know what to expect, what economies of scale in dairy farming and it op ons are open to them, and how to is very hard for a farm with just 2–3 cows move successfully along whichever of the (the average for this type) to recover the four routes they choose; costs of the investment in buildings and milk 2. Off er investment support to help “small equipment needed to produce hygienic milk. dairy farms” grow into “medium dairy Therefore farms of this kind have four main farms” and prepare to meet EU standards; op ons open to them: 3. Ensure that the na onal regula on 1. To upgrade to EU standards, and enlarge applied to green markets and informal the herd at the same me. The main sale is not too demanding. A emp ng constraints here will be capital (with to improve na onal milk quality by which government measures could clamping down on green markets could help) and access to land (which is more well have disastrous consequences, problema c); either squeezing suppliers out of a

50 From these milk subsidy data, 2–5 cow farms provided 40 percent of the dairy milk supply; the na onal es mate based on the Project Farm Survey, Master Sample and Pilot Agricultural Census was that 60 percent of the dairies’ input came from such farms. 51 The analysis of surveyed farmers’ inten ons, presented in sec on 9.7.1, suggests that most of this group believe they will stay in business and even expand. As noted in that sec on, the consultants doubt whether their future will be so bright, given the exac ng EU standards and the signiﬁ cant economies of scale in dairying.

161 lightly-regulated system into completely also prepare for the compe on they will unregulated direct sale or forcing them face from more effi cient EU Member States. out of business en rely – to the serious The average milk yield in this group is around detriment of household income. The 4,000 litres and could almost certainly be focus should not be on shrinking the profi tably increased through be er feeding milk supply to green markets, but on – indica ng a clear goal for the extension increasing the supply to dairies. services. Dairy, medium dairy farm Dairy, large dairy farm These 6–20 cow farms represent just It is es mated that in all of BiH there are only 0.8 percent of ca le farms, 5.5 percent around 70 private farms with 21–100 milking of cows and around 20 percent of the cows, together accoun ng for just 1 percent milk supply to dairies.52 Whilst small by of cows and 3 percent of the milk supply to interna onal standards, these are serious dairies. They are rela vely large businesses, businesses within the BiH context, genera ng producing at or close to EU standards and on average gross output of 17,000 KM per completely oriented to supplying milk to year from milk and a further 6,000 KM from dairies. Average milk yields are close to 6,000 beef; this is close to EUR 1,000 per month in a litres per cow, similar to their compe tors in country where the official minimum monthly the EU, and the main area for improvement wage is around EUR 16053 (though there is a should be in improved feeding and be er big diff erence between gross output and net use of forage, so as to reduce the feed cost profi t). per litre. Although large, these are s ll predominantly family farms, opera ng as Just over half of these farms already produce much as possible with family labour and milk at or near to EU standards (E Class keeping their wage bill down. One new issue or Class I) and those that do not face an that these larger farms have to contend with increasing incen ve to improve their milk is manure storage and handling in order to quality in order to receive the higher rates of comply with the EU Nitrates Direc ve, and milk subsidy and avoid price penal es from many will need investment in this area. the dairies. More importantly, their herds are large enough to repay the costs of the Most importantly, these farms are generally inves ng in buildings and equipment. large enough and well enough organized to contend eff ec vely for IPARD support and This farm type should arguably become the bank co-fi nancing. They are presented in main focus for na onal dairy policy, with a sec on 11.2 of this study as one of the main series of investment and advisory measures targets for IPARD support, leaving government aiming to help such farms enlarge, upgrade to free to target its limited funds to the medium EU standards and improve milk yields, forage and small dairy farms that cannot realis cally produc on and profi tability. Whilst the dairies benefi t from IPARD. would love to collect high quality milk a tonne at a me, the reality is that the exis ng 1,300 Dairy, corporate dairy farm “medium dairy farms”, plus those “small dairy farms” that manage to expand above 5 cows, This category refers to farms with more than will form the backbone of the dairy supply 100 dairy cows, most of which are registered chain for some years to come. as legal en es. Sta s cal returns indicate that there are around 30 such farms in BiH As well as the challenge of mee ng milk (including a few very large farms established standards and regula ons, these farms must by dairies), which have approximately

52 27 percent and 15 percent from the same two data sources, respec vely. 53 343 KM in FBiH and 320 KM in RS, in 2009.

162 2.5 percent of all cows and provide some typically very small, with one or two beef 10 percent of the formal milk supply. They cows providing milk for household use and to tend to have professional management, help rear up one or two beef ca le, but also access to fi nancing and good coopera on include larger commercial suckler cow units. with their dairies, and are well aware of In EU terms such farms have two advantages: EU requirements for their sector. Any farm . As they do not provide milk to dairies, they of this size has to have facili es for storing do not have to comply with EU milk hygiene and handling manure, but the Project Farm regula ons; Survey indicated that twothirds needed some . A series of specifi c EU measures have further investment in this area. provided support for suckler produc on. The main weakness of these farms is fi nancial, Successive reforms of the Common since most have invested heavily, o en with Agricultural Policy have shi ed funds from borrowed money, and have signifi cant wage such “un-decoupled” payments into the bills. During the world milk price boom of core Single Farm Payment and it is not yet 20067 such farms did well across the Balkans, clear what regime will apply when Bosnia but under current condi ons they may have and Herzegovina eventually joins the EU, to give greater a en on to effi ciency and though there is quite a possibility that controlling costs in order to survive. suckler cow payments will remain an op on at least in the “Less Favoured Areas” where Eff ec vely these are medium-sized businesses they are most usually found. with access to commercial capital and are not proposed as a key target for IPARD support, RS has recently started to off er a subsidy to except in the specifi c area of manure storage suckler cow producers, and this represents and handling. However, these farms could one of the prac cal alterna ves for small provide a useful fallback in a later call for and/or remote dairy farms that either cannot tenders should the smaller dairy farms prove aff ord the costs of upgrading to EU standards incapable of sa sfying IPARD requirements. or cannot supply suffi cient quan es of milk to jus fy the costs of collec on. It is an area Dairy-beef farm that should be developed further, including applied research and on-farm demonstra on There are close to 5,000 farms in Bosnia and to help farmers decide if this system is right for Herzegovina that appear to combine dairy them, and then to implement it as profi tably produc on with commercial beef fa ening, as possible. and together they account for around 9 percent of all ca le, 3 percent of cows and Beef fa ening, small up to 11 percent of the total milk supply to dairies. EU integra on will aff ect their dairy This category covers the 12,000 farms with enterprises as discussed above and their beef 1–10 fa ening beef ca le and no milking enterprises as discussed below, so this hybrid cows. Together they account for 7 percent of farm type will not be analysed any further – all ca le and almost 20 percent of na onal except to note that they probably have the beef produc on. fl exibility to expand their dairy herd at the These farms should face no great challenges expense of beef, or vice versa, giving them in complying with EU regula ons but will slightly more op ons than the average ca le be quite suscep ble to compe on from farm. the Single Market, as well as to imports Beef breeding from countries such as Brazil, Argen na and Botswana allowed under EU quota The 5,500 farms with beef cows account arrangements. Financial calcula ons for a for almost 3.5 percent of ca le farms and few farms visited by the project team showed a similar propor on of total cows. They are that feed costs plus the purchase price of the

163 calves represented a very high propor on construc on of manure storage facili es, and of the total sale value; it seemed that the the purchase of new machinery. farms were only making a profi t because they grew much of the feed themselves, and they 9.5.2 Sheep would have made almost as much money if With the rela vely rare excep on of they had got rid of the beef ca le and simply commercial sheep dairying (which has to meet sold their maize and soya. Thus these farms EU standards very similar to those for dairy are very sensi ve to price fl uctua ons, and cows), sheep producers will not be greatly an increase in feed cost or drop in the price aff ected by EU legisla on. They will have to of beef could move them from profi t to loss, implement animal iden fi ca on (now being whilst a good harvest bringing low feed costs introduced in FBiH) and animal health controls, should ensure a profi table year. but have no major hygiene issues, no specifi c Making money from such a low margin animal welfare legisla on to implement, and enterprise depends on careful adjustment of are generally extensive enough to avoid major the feeding level and forage-concentrate mix problems of nitrate pollu on from manure. in response to changing market condi ons. One EU-driven change that could aff ect the Small farms are not normally good at such sector would be enforcement of the animal detailed management (and those that are welfare requirement for stunning before on- rapidly become bigger); a good extension farm slaughter, which could lead to changes service could help, but the long-term in the marke ng chain, with more animals development of the small beef farm sector being channelled through slaughterhouses will probably depend as much on world rather than being sold direct to households market trends as on any ac ons by the and restaurants. farmers themselves. Household sheep fa ening Beef fa ening, large The es mated 1,600 households that fa en There are an es mated 130 farms in Bosnia 1-lamb to use some surplus pasture and and Herzegovina with more than 20 fa ening provide meat for the household account for beef ca le, though many are considerably only 0.2 percent of all sheep. They are likely to larger and the average herd size is just over con nue largely untouched by EU legisla on 100 head. Together they represent almost and may well ignore na onal regula ons as 3.5 percent of total ca le and just over well. The lambs are – or should be – tagged 10 percent of the beef supply. on the farm of birth and so the only obliga on on the producer is to report their death or The same economic issues apply as for smaller slaughter, which so far has proved almost beef farms, but the diff erence is that the larger impossible to enforce. farms typically have be er management, be er access to land and be er machinery Household sheep breeding for forage produc on. Given their size, they Far more important at the household level could be signifi cant sources of water pollu on is the prac ce of keeping 1–5 breeding ewes from manure (and occasionally also silage and rearing their lambs for household use effl uent), and so many will need to invest in and informal sale. With an es mated 21,000 this area in order to meet EU standards. such households, they account for a third of sheep holdings but only 6 percent of all sheep These commercial farms probably would and 7 percent of sheep meat produc on. respond to good advice and to demonstra ons of improved forage techniques, as well as The impact of EU regula on will be similar having suffi cient scale and business ability to that for the previous category, except that to par cipate in the IPARD programme for the breeding ewes should be ear-tagged and improvement and expansion of buildings, reported, and this is a rela vely profi table

164 form of produc on, with no lambs to buy and Although small by na onal standards, these fairly limited use of concentrated feed. It is fl ocks will o en contribute a major share of considerably less labour-intensive than keeping household income. They do not have labour a “house cow” that needs to be milked twice a costs to pay but, because of the shortage day, so this farm type will probably con nue of land on most of the small holdings in rela vely unchanged un l socioeconomic Bosnia and Herzegovina, will o en have to developments reduce the number of people buy a signifi cant propor on of their winter interested in backyard farming. feed. Thus the main factors infl uencing the development of this sector will be the Commercial sheep fa ening economic ones of feed and lamb prices. This category covers farms that buy and rear more than 5 lambs as a business. The In many parts of the EU, sheep produc on is es mated 3,200 farms of this kind typically considered to make an essen al contribu on have close to 30 fa ening lambs and to the farmed environment, and hence a probably rear them as a secondary farming number of subsidies have been provided to enterprise. As with beef fa ening farms, sheep producers over the years. This could be they are sensi ve to the price of their inputs a future opportunity for this group of farms, (young lambs and feed) and the price of their which is unlikely to par cipate much in the outputs (fi nished lambs), but as much of the IPARD programme. feed comes from pasture they operate on Commercial sheep breeding, large healthier margins than beef producers and so are less immediately suscep ble to EU The es mated 1,000 commercial farms with compe on. over 100 breeding ewes are compe ve in size with many producers in Europe. Together Commercial sheep breeding, small they account for around a quarter of the The es mated 27,000 farms with 6–20 na onal sheep fl ock and a similar share of the breeding ewes represent 30 percent of the sheep meat supply to slaughterhouses. na onal sheep fl ock and 25 percent of its meat The issues aff ec ng these producers are output. These will be part- me enterprises, similar to those of the previous category, with most of the household income origina ng except that they are likely to have higher from employment, pensions or other forms cash outgoings, be even more dependent on of agriculture, and the sheep output is mostly sheep produc on for their livelihoods, and marketed informally. have a generally more professional approach The main impact of EU integra on on to sheep produc on. Whilst one of the main this sector would be if the ghtening up economic strengths of the sheep sector is that of marke ng and slaughtering reduced it tends to require quite low levels of capital the eff ec ve price that producers got for investment, some of the farms in this group their lambs and so made the business less might wish to take account of the opportunity profi table. That said, these farms generally of IPARD in order to construct buildings for operate from low opportunitycost land and overwintering and early lambing, and to buy labour, and so should be rela vely resilient. new tractors and forage machinery. Commercial sheep breeding, medium 9.5.3 Pigs Into this category fall almost 9,000 farms Experience across central Europe has shown with 21–100 breeding ewes, producing for a that the pig sector is one of the areas of variety of marke ng channels. They account agriculture most aff ected by EU accession. for 34 percent of all sheep and 37 percent One element is the investment needed in of sheep meat output, making this the order to comply with EU requirements on most important part of the na onal supply. animal welfare and manure handling, but

165 more infl uen al has been the compe on However, what these households will see is from large-scale and highly effi cient producers EU-sourced pork, bacon and ham on sale in from countries such as Denmark, Belgium and supermarkets for less than the cost at which the Netherlands. Feed cons tutes such a high they can fa en their own pigs on purchased propor on of total produc on costs that the feed. If the experience of other countries original EU support mechanisms eff ec vely is anything to go by, a large propor on of treated pig meat as “packaged feed”, and households will simply stop rearing pigs the diff erence between profi t and loss now and buy their meat instead. The fi rst-order depends on a few percentage points higher eff ect of this would be a drop of 20 percent or lower feed conversion effi ciency and daily or more in na onal pig meat produc on, live weight gain. The tradi on of small-scale and so a cri cal ques on is to what extent and backyard pig-keeping in many Balkan commercial producers are able to expand countries was founded on rela vely high their produc on to meet this new demand, in import protec on, and once exposed to the the face of strong compe on from imports. EU Single Market even tradi onally strong producers such as Hungary found themselves Household pig breeding/fa ening, “house under considerable pressure. sow” Home and informal slaughter are almost The es mated 23,000 households with as important for pigs as for sheep, so the a single breeding sow, accoun ng for enforcement of EU standards for animal 18 percent of pig holdings and 20 percent of welfare at slaughter could have a signifi cant all pigs, are closely linked to the system just impact on the marke ng chain. Pigs also have described, partly producing pigs for it and to be brought into the EU-compa ble system partly fa ening their own pigs in very small- of animal iden fi ca on before accession, scale opera ons. These holdings will be just but this is scheduled to take place a er the as suscep ble to EU compe on and may also eartagging of sheep. The principal human be expected to decrease rapidly in response health risk from pig produc on – that of to imports, leading to a further reduc on of trichinella infec on – is already eff ec vely up to 14 percent of na onal produc on. addressed through low-cost tes ng by local Commercial pig fa ening, pig breeding- veterinarians and so no major changes will be fa ening, and breeding needed here. The es mated 24,000 commercial pig farms Due to ethnic and religious tradi ons, pig have been split according to the main focus produc on is concentrated in RS and BD, of their opera on, rather than by size, into: though s ll with a signifi cant amount of . 8,000 pig fa ening farms, accoun ng for produc on in Croa an areas of the Federa on. 6 percent of pig holdings and 8 percent of Household pig fa ening all pigs; . 2,000 breeding-fa ening farms, The tradi onal prac ce of buying a couple of represen ng 2 percent of pig holdings and weaners in the summer and fa ening them 15 percent of pigs; up for the winter is es mated to take place on . 16,000 pig breeding farms (either selling almost 80,000 households and account for just weaners to specialist fa ening farms or, over 60 percent of pig holdings and a quarter more frequently, selling them for slaughter of pigs. These producers are analogous to the as piglets), with 13 percent of pig farms and “household sheep fa ening” farms discussed 31 percent of pigs. in the previous sec on, though numerically much more signifi cant, and like them will be All three farm types have to work within the almost untouched by EU regula ons other very ght margins between feed in and pigs than those on slaughter. out, and will only survive if they can match

166 the effi ciency of their EU compe tors. Some (currently es mated at 27 percent) is likely to smaller units will con nue to produce on decline gradually rather than drama cally. the basis of home-grown feed and uncosted family labour, but most larger farms will have Laying hens, small commercial to make signifi cant improvements in order For the small-scale commercial producer to secure their future. This may well result (defi ned here as 21–500 laying hens but in major structural change similar to that averaging only 40), the situa on is rather already seen in the broiler industry, with diff erent. These es mated 21,000 producers development of a small number of quite large usually have to buy their feed and compete farms, quite o en linked to interna onal with shop-bought eggs from large producers or, companies providing their gene c material, a er accession, from elsewhere in the EU. Their preven ve health care and management food-conversion effi ciency is almost certainly advice. much lower than that of large professional units, With compe vely driven restructuring and a and they can only survive by achieving a price need for major investment to meet EU animal premium for locally sold eggs – or by simply not welfare and hygiene standards, there is a coun ng the real costs of produc on. clear role for IPARD in assis ng the pig sector, Such medium-scale produc on (currently though for many small producers the future producing just under 20 percent of total eggs will lie in a business other than pigs. in BiH) has declined considerably in the EU and is likely to do so in Bosnia and Herzegovina 9.5.4 Poultry as well, resul ng in a pronounced bi-modal Poultry produc on eff ec vely comprises structure of very small and very large farms. two completely diff erent businesses: egg Laying hens, large commercial produc on from laying hens and meat produc on from broilers. Both will be aff ected It is es mated that there are close to 200 by EU animal welfare and, to a lesser extent, large-scale egg farms, together housing environmental standards. almost half of the na on’s laying hens and producing 54 percent of its eggs. Whilst the Laying hens, household defi ni on used was any farm with more than It is es mated that nearly 170,000 households 500 laying hens, in prac ce there are almost keep a few laying hens to provide the family no farms in the hundreds of birds and the with eggs. Together these account for almost average for this type is 12,000 layers. 90 percent of all layer holdings, though many Although this sector has not developed as would not fi t in any other defi ni on of a rapidly as broiler produc on over recent “farm”. years, it is understood that most of these 200 This kind of produc on has mul ple are serious producers, working at or close to objec ves: to provide really fresh eggs, European levels of effi ciency. The principal typically perceived as being healthier threat to this group will come from the EU than those bought from a shop; to use up welfare requirement to completely re-equip household scraps; to provide manure for the tradi onal ba ery units with new “enriched vegetable garden; and as a daily ac vity that cages”. This is an area where IPARD support many people enjoy. As such it is not primarily could make a very mely interven on and driven by economic mo ves, and the fi nancial help to prepare this sector for a viable future outlay is small, so this form of produc on is within the EU. unlikely to be much aff ected by EU integra on Broiler hens, household/small commercial and will develop more in response to changes in lifestyle and preferences. Thus the share of It is es mated that almost 30,000 households na onal egg produc on produced in this way buy and rear a few broiler hens for their own

167 consump on. Whilst these represent 99 9.5.5 Processors percent of all broiler holdings, the average number of birds is just 20, so together they Dairy processors will be faced with a whole account for less than 10 percent of all broiler ra of legisla on rela ng to milk quality and hens, making this the most clearly bi-modal hygiene parameters. Both they and meat of all livestock sectors. processors will face more rigorous standards for premises and inspec on rou nes. As with household pig fa ening, the feed cost is o en greater than the cost of buying Analysis of the current condi ons in dairies chicken meat in the shops, and the process and meat processors during site visits and of killing, plucking and gu ng chickens is not inspec ons indicates that the processing as pleasurable as the daily collec on of eggs. industry is generally well equipped, in Thus this form of produc on may be expected suitable premises using modern technology. to decline rela vely rapidly in response to the As would be expected, this is par cularly availability of low-cost and ready-prepared the case with the larger factories, and it poultry meat from home and abroad. was clear that almost all plants visited were upgrading their opera ons with reference to Broiler hens, large commercial the appropriate EU standards. This upgrading process is proceeding without signifi cant The es mated 300 large broiler producers, support from competent authori es, such many of them structured as legal en es, are as en ty ministries of agriculture or their one of the success stories of BiH agriculture. departments. Their number has more than doubled in the last fi ve years, supported by ver cal Before Bosnia and Herzegovina can accede integra on whereby contracted growers to the EU, all of its meat and dairy plants will are provided with both their key inputs and need to fulfi l the same requirements as for a guaranteed market. These 300 producers export to the EU now. Thus, if the competent already produce over 80 percent of the authori es can secure the necessary country country’s poultry meat output and seem set to level approvals, processors will be able to expand, enabling them to fi ll the gap created start adap ng their opera ons and product by the decline of the small commercial sector ranges to meet EU requirements in advance before it is fi lled by imports. of accession. The loss of Croa a as a CEFTA export market will be the most signifi cant EU regula on will put new pressures on factor in the short term; if BiH processors this sector, principally through the welfare wish to con nue supplying this tradi onal requirement to reduce stocking densi es but market, they and the veterinary services will also through restric ons on manure disposal, need to meet the requirements for trade to whilst the compe on in this low margin the EU as soon as poss ible. business will require con nuous technical improvement. IPARD funds could assist these 9.6 Benchmarking producers to improve and enlarge their buildings, thus allowing them to meet new This sec on presents key fi gures on the BiH stocking density requirements without loss livestock industry in a European and regional of throughput, as well as suppor ng further context. The primary source of data is the growth of the sector. FAOSTAT database for Europe54 for 2010,

54 Which excludes Cyprus.

168 the latest year available; to allow direct 9.6.1 Ca le comparison the FAOSTAT data have been used for all countries, including BiH, and so Ca le numbers may diff er from other values presented in this The size of the total ca le herd in each report. Certain data not covered by FAOSTAT country is shown in the following graph; BiH have been taken from the Eurostat database; holds 0.5 percent of all ca le in the countries this has rather limited coverage of the covered and ranks in the middle of the Western Balkans, so data for this region have Western Balkans countries (Graph 9.2). been taken from other sources, as shown in the notes to each chart. The number of milking cows is shown in the Graph 9.3. All new charts follow a similar structure, with the data ordered as follows: By this measure BiH houses almost 1.1 percent of the milking cows in the countries covered, . EU15, with the Member States in decreasing though its ranking amongst the Western order for the variable shown; Balkans countries remains unchanged. The . New Member States (“NMS”), with the rela vely high ra o of milking cows to total Member States in decreasing order for the ca le in this region refl ects two common variable; features of ca le produc on systems: . Western Balkans (“W. Balkans”), with . Cows are typically kept for considerably the countries in decreasing order for the more lacta ons than in most of the EU15, variable, and BiH highlighted in red. resul ng in a higher ra o of cows to heifers; This sec on focuses on produc on comparisons, . A signifi cant propor on of the ca le are with issues of quality and EU standards being slaughtered as calves, reducing the propor on addressed in Chapters 2, 3, 6 and 8. of fa ening ca le in the total herd.

Graph 9.2: Ca le numbers in 2010

Source: FAOSTAT

169 Graph 9.3: Milking cow numbers in 2010

Source: FAOSTAT

Beef produc on Produc on of beef is shown in the following Beef produc on per animal slaughtered graph; here BiH produces just 0.28 percent of (i.e. average carcass weight) is shown in the total beef output for these countries: Graph 9.5.

Graph 9.4: Beef produc on in 2010

170 Graph 9.5: Beef produc on per animal slaughtered in 2010

Source: FAOSTAT

Average carcass weight in BiH is recorded Milk produc on as 154 kg, just under the Western Balkans average of 165 kg and a li le more than half FAO es mates of total milk produc on the EU15 average of 282 kg, conﬁ rming the (tonnes) per country are shown in the regional tendency to slaughter animals young following graph, with BiH accoun ng for and at light weights. 0.47 percent of produc on by these countries.

Graph 9.6: Total milk produc on in 2010

Source: FAOSTAT

171 One of the important features of milk Informal use is s ll quite high in most of the produc on in BiH, along with many other New Member States, with Romania’s value countries of Central and Eastern Europe, is of 83 percent being followed by Bulgaria the important role played by on-farm use and (56 percent), Poland (27 percent), Lithuania informal marke ng of milk, which can result (26 percent), Hungary (22 percent) and in a signifi cant diff erence between total milk Cyprus (21 percent). Data are unavailable for produc on and milk collected by dairies. several of these countries, and only Estonia These two fi gures are reported separately (8 percent) is repor ng as having a level by Eurostat, though without data for the of informal use almost down to the EU15 Western Balkans, so a variety of sources have average. been combined to make the following graph: Graph 9.7: Milk collected by dairies and used informally

Source: EU from EUROSTAT for 2010 with * indica ng no data available on informal use; BiH from this study; Serbia and Croa a from IPARD dairy sector study for Serbia

These data suggest that on-farm and informal That informal use s ll remains high in many use of milk in BiH, at 69 percent of all milk countries a er 3, 6 or even – in the case of milked from cows, is second only to Romania, Greece – 35 years a er accession, suggests where 83 percent of milk is used informally. that it will be many years before formal dairy The BiH fi gure is high even for the Western processing becomes the normal marke ng Balkans, comparing with 35 percent in route for milk in BiH. Serbia and a reported value of just 5 percent The following graph shows milk yield per cow, in Croa a (data are not available for TfYR recorded as total milk milked, regardless of its Macedonia or Montenegro). fi nal use: In the EU 15, just 5 percent of overall milk is These data show BiH to have the second used informally, with rela vely high levels of lowest yield of all the countries covered, informal use being found in countries where with only Montenegro repor ng lower. small farm structures s ll predominate, such The recorded fi gure for BiH in this dataset as Portugal (11 percent), Austria (16 percent), is 2,610 kg/cow, which compares with a Spain (21 percent) and Greece, with a Western Balkans average of 2,730 – though reported value of 64 percent of all milk used all countries in this region have a tendency informally. to let calves suckle longer than is normal in

172 Graph 9.8: Milk yield per cow in 2010

western Europe, so the total amount of milk sector has a long way to go to become produced by the cow may be signiﬁ cantly compe ve within the EU. higher than indicated here. 9.6.2 Sheep Pu ng this yield into a European context, BiH Sheep numbers yields are just under half the New Member States average of 5,450 kg, and just under Sheep numbers by country are shown in the 40 percent of the reported EU15 average of following graph, with BiH accoun ng for just 6,710 kg. This indicates that the BiH dairy under 1 percent of the total:

Graph 9.9: Sheep numbers in 2010

173 Graph 9.10: Sheep meat produc on in 2010

Sheep meat produc on being slaughtered at very low weights, or are Produc on of sheep meat is shown in the avoiding oﬃ cial slaughterhouses and hence not Graph 9.10, with BiH accoun ng for just being covered by sta s cs. The following chart 0.21 percent of total output: of slaughter weights shows that the BiH average of 15 kg is typical for the Western Balkans, just The fact that BiH has almost 1 percent of total below the average of 16 kg for the New Member sheep but produces just over 0.2 percent of States and not so far below the ﬁ gure of 19 kg total sheep meat suggests that either sheep are reported in the EU15:

Graph 9.11: Sheep meat produc on per animal slaughtered in 2010

Source: FAOSTAT

174 Graph 9.12: Number of sheep recorded as slaughtered in 2010

Source: FAOSTAT

The key must therefore lie in the very 9.6.3 Pigs high prevalence of informal slaughter, as Pig numbers discussed in Chapter 2. The Graph 9.12 of sheep numbers slaughtered shows that FAO Total pig numbers are shown in the following data record just 129,000 sheep slaughterings graph, with BiH accoun ng for 0.37 percent against a total ﬂ ock size of 1,046,000. of all pigs in the countries covered:

Graph 9.13: Pig numbers in 2010

Source: FAOSTAT

175 Graph 9.14: Pig produc on in 2010

Source: FAOSTAT

Pig meat produc on Average carcass weight from recorded slaughterings is shown in the Graph 9.15. Pig produc on is shown in the Graph 9.14, with BiH producing just 0.06 percent of the On average, pigs are slaughtered at slightly total. lighter weights in BiH than elsewhere in

Graph 9.15: Pig meat produc on per animal slaughtered in 2010

Source: FAOSTAT

176 Europe – 70 kg in BiH compared to 74 kg in the daily live weight gain resul ng in a longer Western Balkans, 85 kg in the New Member me to slaughter. These are two of the three States and 86 kg in the EU 15 – though this is cri cal factors that will need to be addressed a result of two confl ic ng factors: a signifi cant if BiH pig producers are to stand up to their propor on of animals are slaughtered as European compe tors, with the third key piglets, balanced against a tendency for factor being food conversion rate. fa ened pigs to be taken to higher weights than now common in western Europe. 9.6.4 Poultry However, this rela vely small diff erence in Poultry numbers carcass weight cannot account for the fact Total chicken numbers, including both broilers that 0.37 percent of Europe’s pigs produce and layers, are shown in the following graph: just 0.06 of its pig meat, and the real causes are (a) a very high degree of informal BiH accounts for just over 1.5 percent of slaughtering (as discussed in Chapter 2) and total chickens in countries covered, and rivals (b) lower-than-average output per pig, due to Serbia for fi rst place amongst the Western fewer pigs reared per sow per year, and lower Balkans.

Graph 9.16: Poultry numbers in 2010

Source: FAOSTAT

177 Graph 9.17: Poultry slaughtered in 2010

Source: FAOSTAT

Poultry meat produc on poultry producers to operate only during the summer months in order to avoid the high The number of chickens slaughtered in 2010 costs of winter hea ng. is shown in the Graph 9.17. Poultry meat produc on is shown in the Here BiH’s share drops to just 0.42 percent following graph, with BiH accoun ng for of the total. This may be explained at least 0.38 percent of the total, generally in line in part by the reported tendency of many with its share of chickens slaughtered:

Graph 9.18: Poultry meat produc on in 2010

Source: FAOSTAT

178 Graph 9.19: Poultry meat produc on per animal slaughtered in 2010

Source: FAOSTAT

Average carcass weight of slaughtered poultry and technology to meet market demand, with is shown in the Graph 9.19. only the seasonality of produc on standing Average slaughter weight in BiH is 1.4 kg, only out compared to other European producers. slightly below the EU15 average of 1.5 kg and Egg produc on that in the New Member States of 1.6 kg; this is consistent with the picture that poultry Egg produc on per country is shown in meat produc on in BiH is dominated by the following graph, with BiH producing professional producers using modern breeds 0.6 percent of total eggs: Graph 9.20: Egg produc on in 2010

Source: FAOSTAT

179 9.6.5 Livestock farm structures The converse of this picture is the average dairy herd size, as shown in the Graph 9.22. What is largely missing from the above analysis is an interna onal comparison of With an average of just 1.5 cows per dairy livestock farm structures, since in most cases herd, BiH has the second smallest herd neither FAOSTAT nor Eurostat report the structure in Europe, with only Romania having number of holdings with diff erent kinds of smaller herds (at an average of 1.4 cows). As livestock nor the average herd or fl ock size. discussed at some length throughout this The one excep on is the dairy sector, where report, this structural picture will be one of Eurostat does record the number of holdings the key factors and challenges aff ec ng BiH’s with dairy ca le. The following two graphs progress and compe veness within the EU. are based on the IPARD dairy sector study for Serbia, with data from the latest year then Unfortunately, comparable interna onal data available (2007 to 2009, depending on the are not available for the other species and country), updated to include the data for BiH kinds of livestock, but the key structural issues generated in this study. are discussed in Chapter 2, which also looks The following graph shows the number of at the distribu on of herd and fl ock sizes (e.g. dairy herds: the bimodal structure of poultry produc on)

Graph 9.21: Number of dairy herds

Source: FAOSTAT

Despite having just 1.1 percent of the milking and so gives a more detailed picture than just cows in the countries covered, BiH accounts a na onal average. for almost 5 percent of all dairy herds, and only Romania, Poland and Serbia have greater 9.7 Es ma ng on-farm investment numbers of farms involved in milk produc on; needs these four countries together account for two-thirds of all dairy farms in the EU plus the Most livestock farms will need to make Western Balkans. some investments in order to become both

180 Graph 9.22: Average dairy herd size

Source: FAOSTAT compe ve and compliant when in the EU. BiH would then be in the EU and the full However, it is rela vely rare for a farm to make acquis communautaire would apply. major investment in buildings, equipment and machinery without at the same me In many cases the respondents gave similar making changes to their overall scale and answers to both the 5-year and the 10- enterprise mix; typically a farmer faced with year scenarios, indica ng that they saw the the need to invest signifi cant funds to meet biggest changes taking place rela vely soon; EU requirements will choose between the two the main excep on to this was farmers who op ons of qui ng the enterprise en rely, or planned to re re between 5 and 10 years into inves ng and enlarging together. Therefore the future. The following analysis is based on the fi rst step in assessing investment needs the 5-year responses, which capture most of is to es mate the size and structure of the the an cipated change. future livestock sector for which investments The rela ve changes shown from the survey will be made. (percentage of enterprises s ll opera ng a er 5 years; percentage change in number 9.7.1 Poten al changes in farm of breeding animals; percentage change in structures number of total animals) were applied to the In order to get some impression of how total numbers of farms and livestock es mated farmers may respond to EU integra on, the in Chapter 3 in order to es mate the future Project Farm Survey asked them to state their structure of the livestock sector. In the tables vision for each livestock enterprise under two below, farms are kept in the same row before diff erent scenarios: and a er expansion, even though expansion of their herd or fl ock may move them up to a . Looking ahead 5 years and assuming that larger farm type (as an example, the expected BiH would not yet be in the EU, but many of future average herd size on the exis ng “house the EU standards would be in place; cow” holdings is 2.0 cows, which would . Looking ahead 10 years and assuming that reclassify them as “small dairy farms”).

181 Limita ons of the methodology Inten ons of ca le farmers The farmers’ responses to this survey ques on The number of farms with ca le is es mated should be treated with some cau on, for to fall by 32 percent, to 110,000. Somewhat several reasons: surprisingly, the largest drop was predicted 1. At present, rela vely few BiH farmers for the largest category, the corporate dairy have an accurate understanding of what farms, where half of all respondents said EU accession will mean for them. One that they would cease opera ons in the par cular phenomenon that was seen next fi ve years. This may refl ect the current following the last enlargements was diffi cul es being faced by farmers who that rural households found they could borrowed heavily to expand their herds buy pig and poultry meat in the shops during the milk price peak of 2007–8 and are more cheaply than they could produce now struggling to service their loans. The next it themselves, so there was a drama c biggest change is predicted at the other end drop in backyard produc on of these two of the scale, with the number of “house cows” meats; whilst some respondents seem to dropping by 40 percent and the number of have had a good idea of what was in store small beef fa ening units falling by a third. for them here, many did not and seem to The category that the consultants consider to have been unrealis c about their chances be most at risk, the “small dairy farms” that of survival within the EU’s Single Market. need a lot of investment yet lack economies 2. Farmers, like other businessmen, o en of scale, only foresaw an 11 percent drop in overes mate how fast their businesses numbers; the reality may be a much more will develop in the future. The predicted drama c fall. growth in livestock numbers shown below Most of the farms that expect to con nue is dis nctly more rapid than recent trends, in business foresee expansion, which would and it might be more realis c to interpret result in an enlargement of the total herd and these 5-year inten ons as indica ng what of the average herd size: will really take 10 years to fulfi l. . The number of breeding cows would 3. Predic ng the future is always a diffi cult increase by 30 percent to 289,000, bringing undertaking, as nobody can say what the the average per farm up to 2.6 cows in place world economy will look like in 5 or 10 of the current 1.4; years’ me, nor whether any outbreaks . The number of total ca le would increase of epizoo c disease or other drama c by 42 percent to 540,000, doubling the events will aff ect the livestock sector average herd size from 2.4 to 4.9 head. during this period. 4. The rela vely small size of the Project The overall trend – for a drop in herd numbers Farm Survey is a signifi cant weakness and an increase in average herd size – is both for this par cular ques on, where the plausible and in many ways desirable, though variability of answers is high.55 it is ques onable whether animal numbers will increase quite as fast as the farmers hope. With these issues in mind, the following analysis is perhaps best treated as indica ng Detailed es mates for each ca le farm type farmers’ current inten ons, rather than a are presented in the following table: direct predic on of future farm structures.

55 The Project Farm Survey is believed to give quite good indica ons of low-variance numbers, such as output per animal (where the highest values are only 2–3 mes the lowest values) or share of output marked through diff erent channels (where the total always sums to 100 percent). However, with one farmer with 50 chickens saying that he will reduce to zero and another saying that he will increase to 5,000, the sampling error becomes much more signifi cant, since the inclusion or exclusion of just one farmer can have a signifi cant impact on the overall result. In order to counter this, a few of the most extreme responses were excluded en rely from the analysis.

182 19) 2.2) 2.0) 297) 3.8) 2.8) 55) 12.6)        

122,000 4,500 8,400 20,000 3,100 1289,000 118,000 12,900 - - - -        

(av. 29 (av. (av. 9.5 (av. (av. 1.5 (av. (av. 1.0 (av. (av. 2.5 (av. 1.4 (av. (av. 1.4 (av. (av. 204 (av. 5,500 6,900 2,100 7,700 12,000 86,000 102,000 +46% +68% +21% 223,000 +20% +37% +67% +30% +19% 13) 2.5) 457) 165) 7.4) 3.0) 28) 14.9) 3.4) 103)         lecows Breeding  

155,000 6,900 231,000 48,000 14,000 30,000 27,000 5,800 21,000 1540,000          

(av. 16 (av. (av. 7.5 (av. (av. 1.3 (av. (av. 3.7 (av. 1.9 (av. (av. 54 (av. (av. 2.4 (av. (av. 2.2 (av. (av. 290 (av. (av. 102 (av. 8,000 4,000 35,000 10,000 21,000 27,000 13,000 133,000 129,000 +0% +44% +38% 381,000 +17% +79% +40% +44% +42% +14% +65% type le farm leca Total 61,000 8,000 20 60 130 31,000 3,800 4,600 1,100 1110,000           -0%

-40% -50% -11% -20% -17% -17% -33% -20% -32% 30 70 130 5,500 4,700 1,300 12,000 35,000 102,000 161,000 each ca for mates le on number of: future and expected Current ng with ca Farms ng Table 9.1:Detailed es 9.1:Detailed Table and processing on, on-farm le le local sale local Home consump unit) (usually legal > 100 milking cows dairies Supplying milk to Milk mainly for home use; beef mainly for home use; beef mainly for Milk mainly for sale formal 2–5 milking cows dairies, some home use and informal Some to sale 6–20 milking cows dairies Mainly supplying milk to ca 1–10 beef Mainly supplying slaughterhouses 21–100 milking cows (usually private) 21–100 milking cows dairies Supplying milk to ca > 20 beef Various forms of marke forms Various Mainly supplying slaughterhouses ening, ening, TOTAL farm dairy farm small farm large dairy farm Marke 1 house cow Dairy, milking cow 1 2 small dairy Dairy, 6 farm Dairy-beef 7 ca beef and purchased Dairy cows breeding Beef cows Beef 3 medium Dairy, 8 fa Beef 4 dairy large Dairy, 9 fa Beef 5 corporate Dairy, Group Name Descrip

183 ru aeDescrip Name Group Household sheep 1 Commercial sheep 6 Commercial sheep 2 Commercial sheep 4 Household sheep 3 Commercial sheep 5 fa TOTAL breeding, large fa breeding, small breeding breeding, medium ening ening sale. Producing primarily for informal and formal > 100 ewes informally. though a small amount may be sold Primarily for use by the extended family, 1–5 lambs; no ewes Producing primarily for informal sale. 6–20 ewes informally. though a small amount may be sold Primarily for use by the extended family, 1–5 ewes Producing for informal and formal sale. > 5 lambs; no ewes sale. Producing primarily for informal and formal 21–100 ewes Marke Table 9.2: Detailed es n am ihsepTtlsepBreeding ewes Total sheep Farms with sheep ng o Number and share of: on mates for each sheep farm type 63,000 27,000 21,000 3,200 8,800 1,000 1,600 -35% -12% -45% -50% -20% -50% -35%

      

4,800 22,000 11,000 2,100 41,000

900 800 1,515,000 +41% 451,000 +150% -20% 370,000 513,000 +29% +29% -20% -6% 87,000 91,000 3,300 (av. 24 sheep) (av. 4.4 (av. 374 (av. 2.1 (av. 58 (av. 24 (av. 27 (av. 16  

    

1,128,000 112,000

523,000 409,000 2,600 85,000 2,269,000 

      8.1) 85) 3.3) 597) 54)

52) 56) 1,059,000 +58% +17% 283,000 386,000 312,000 +40% +39% -12% 69,000 (av. 17 ewes) (av. 287 (av. 3.3 (av. 44 (av. 17 (av. 12

     - -

446,000 346,000 81,000 434,000 1,302,000

     77) 510) 7.7) 20)

32)

184 Inten ons of sheep farmers base – the backyard pig fa eners to whom they sell their weaned piglets – it seems The number of sheep farms is predicted to inevitable that this segment will also contract drop by 37 percent, to 40,000. The biggest markedly. This par cular part of the sample fall (50 percent) is foreseen for the smallest was extremely small – just three producers category, “household sheep breeding”, – so it has instead been assumed that this followed by a 45 percent drop in the number sector will contract in line with the number of of medium-sized commercial sheep farms. backyard pig fa eners. . As with ca le, con nuing farmers expect to expand with the following results: Commercial pig fa eners (farms who buy piglets from specialist breeders) saw their . The number of breeding ewes would increase by 23 percent to 1.3 million, taking future as bleak, with a predicted 55 percent the average breeding ﬂ ock up from 17 to 33 drop in farm numbers. Those farms which ewes; most expected to con nue were the commercial integrated breeder-fa eners The number of total sheep would increase by and specialist breeding farms including those 49 percent to two and a quarter million, more producing piglets for slaughter. than doubling the average ﬂ ock size from 24 . Along with a large drop in farm numbers, to 57. the pig sector also envisaged substan al These predicted trends seem quite growth by its con nuing farms: reasonable even if, as with ca le, the farmers . The number of breeding sows would are somewhat over-op mis c about their increase by 28 percent to 105,000, taking future rate of growth. the average breeding herd up from 0.7 to a s ll very small 2.1; Detailed es mates for each sheep farm type are presented in the Table 9.2. The number of total pigs would increase by 81 percent to 1.1 million, taking the average Inten ons of pig farmers herd up from 4.6 pigs to 22. The number of pig farms is predicted to drop Pig farmers seem to be aware that the future markedly, down by 61 percent to 49,000. will bring them big changes, and this sector The biggest fall is foreseen in “backyard will probably see more drama c restructuring pig fa ening”, with 71 percent of current than any other kind of livestock. But if producers indica ng that they do not expect anything they are s ll underes ma ng the to be fa ening pigs in 5 years’ me; this impact of EU accession, and the consultants would be en rely in line with the changes would expect to see a very drama c decline seen in other acceding countries.56 Rather in backyard and small commercial pig surprisingly, all of the surveyed farmers produc on over the next 5–10 years. currently involved in “backyard pig breeding” expected to remain in business; given the Detailed es mates for each pig farm type are size of the predicted drop in their customer presented in the Table 9.3.

56 Two “backyard pig fa ening” farms were excluded from the analysis, as they envisaged a 10–30 fold increase in produc on equivalent to star ng a new commercial pig enterprise.

185 ru aeDescrip Name Group Household pig 1 Commercial pig 5 Household 2 Commercial pig 3 Commercial pig 4 TOTAL fa breeding fa pig breeding/ sow” fa breeding-fa ening ening, ening, “house ening ening others in groups 1 and 3 for fa Rearing pigs, mainly for informal sale to and gilts ≥ informally. though a small amount may be sold Primarily for use by the extended family, 1–3 pigs; no sows or gilts by others (“breeding herd”) or fa 1 sow; piglets may be sold for further rearing to eat 15–25 pigs per year. some pigs, as an extended family is unlikely Almost all farms in this group will market the holding (“breeding-fa Buying weaners and fa > 3 pigs; no sows or gilts on formal or informal markets. or informal markets. Rearing and fa and gilts < 40 % of pig LSU as sows and gilts; 40 % of pig LSU as sows and gilts; ening pigs for sale on formal Marke ening them for sale Table 9.3: Detailed es n am ihpg oa isBreeding sows Total pigs Farms with pigs ng o Number and share of: on ening herd”), ening. ened on ≥ ≥ 2 sows 2 sows mates for each pig farm type 127,000 16,000 78,000 23,000 8,000 2,000 -61% -71% -71% -55% -14% -9%    

 

15,000 23,000 3,600 1,700

6,700 49,000 585,000 +209% -56% -56% +34% 178,000 +97% 85,000 154,000 118,000 50,000 (av. 4.6 (av. 1.8 (av. 4.9 (av. 6.6 (av. 44 (av. 11 +81%

     

1,058,000  168,000 220,000

550,000

68,000 52,000

   22)   3.0) 7.8) 98) 61) 38) +67% +48% -56% 82,000 48,000 10,000 24,000 (av. 0.7 (av. 1.0 (no sows) (no sows) (av. 3.1 (av. 5.5 +28%

    - -

 105,000

84,000 15,000 11,000 2.1)    1.6) 5.5) 8.6)

186 Inten ons of poultry farmers of the large commercial sector plus the ready availability of cheap EU-sourced poultry Here, laying hens and broilers are treated as meat, it seems more likely that this part of two separate enterprises. Three surveyed the industry will contract quite markedly. farms that predicted very drama c expansion, almost equivalent to star ng an en rely new Detailed es mates for each poultry farm type enterprise, have been excluded from the are presented in the Table 9.4. analysis. Conclusions on farmers’ expressed The number of farms keeping laying hens is inten ons expected to drop by 65 percent to 65,000. The biggest drop is envisaged for “backyard With the couple of excep ons noted above, laying hens”, down by almost 70 percent, the picture given by survey respondents followed by a 40 percent drop in “small seems generally quite plausible in terms of commercial” producers. All of the surveyed changes to the number of farms and to herd “large commercial” farms, i.e. those with and fl ock sizes, as well as in the structural more than 500 laying hens, are expected to shi s from smaller to larger farm types. remain in business, and so will have to make The predicted rates of growth are markedly the necessary investments to install “enriched higher than those seen in recent years for cages” or other systems compliant with new all species except for poultry, where growth EU rules on animal welfare. The con nuing has indeed been drama c. It is true that farms predicted a modest expansion of EU measures tend to benefi t larger farms, 16 percent, up to 5.6 million hens. both through the pre-accession IPARD The broiler sector was quite op mis c measures whose procedures eff ec vely about its future, predic ng just a 20 percent exclude small farms, and through the post- drop, down to 23,000 farms. Most of this accession Single Farm Payment where was represented by a 20 percent fall in the support is directly propor onal to farm size. rela vely numerous “small commercial There is therefore some reason to assume broiler” farms (those with up to 1,000 birds that growth may occur, though the actual per cycle), whilst only 12 percent of the success of farmers in achieving their vision current “large commercial broiler” farms will be heavily dependent on the availability envisaged that they would cease produc on. of investment funds – the extent of which are examined in the following sec on. The con nuing broiler producers expected signifi cant growth, with an overall increase 9.7.2 Investment costs of 52 percent up to 10.1 million broilers per Investment needs vary quite considerably cycle. The larger producers were looking from farm to farm, depending on their at increasing from an average of 20,000 unique individual circumstances. The very birds up to 30,000 birds per farm, whilst the small farms that predominate in BiH are likely small commercial producers were looking at to use own labour, adapt exis ng buildings expanding from an average of 20 up to 90 and buy second-hand machinery, resul ng birds. in investment costs that are quite diff erent Most elements of this scenario are quite from those of a new building. Hence the plausible, par cularly the marked drop in fi gures generated in this sec on are only backyard egg produc on and the con nuing a very rough es mate to indicate the order expansion of the successful large broiler of magnitude of the funds required, and a farms. Rather less plausible is the idea that number of assump ons had to be made: some 23,000 farms will con nue to produce . Cost es mates are for buildings, equipment commercially with just a few tens or hundreds and machinery, but exclude livestock of broiler hens. With the con nuing expansion purchases;

187 ru aeDescrip Name Group Laying hens, 1 Laying hens, small 2 Laying hens, large 3 Broiler hens, 4 Broiler hens, large 5 household commercial commercial commercial) (household/small small Total commercial family, plus some informal sale. Primarily for use by the extended 1–20 laying hens also be sold informally. through green markets; cull hens may Eggs produced for sale directly and 21–500 laying hens Sell eggs to regular shops, etc. > 500 laying hens sale. Rear chicks for household use and local <= 1,000 broilers per cycle own poultry slaughterhouse.own poultry Sell on contract to processors or have > 1,000 broilers per cycle Marke n am ihlyn esTtllyn esFrswt riesTotal broilers Farms with broilers Total laying hens Farms with laying hens ng o aesBroilers Layers on Table 9.4: Detailed es 167,000 188,000 21,000 190 mates for farm each poultry type -65% -69% -40% -0%     -- --

13,000 190

65,000 52,000 4.8 million 2.3 million 830,000 1.7 million (av. 12,000 (av. 39 (av. 10 +299% +16% -66% -25% 

 

  3.3 million 

 1.7 million 5.6

263 11) 570,000

9,100 million ) ) 29,000 29,000 300 -20% -20% -12%

   ------

23,000 260 23,000 6.6 million 6.1 million 574,000 (av. 20,000 (av. 20 +267% +52% +32% 

 

2.1 million

 

10.1 million 8.0 million 91) 31,000)

188 . Household producers of sheep, pigs EU animal welfare standards), whilst each and poultry were assumed not to make addi onal pig place on expanding farms signifi cant investments; was treated at full cost. . For dairy farms, costs per cow were . Costs for broiler farms were similarly based calculated for each farm type based on analyses made during the Pilot Farm on a detailed analysis of specifi c needs Survey. Per-bird costs from a 10,000 broiler for buildings, equipment and items of unit were applied to “small commercial machinery carried out in Serbia in 2010. broiler farms” whilst the lower per-bird As most of the machinery and equipment costs from a 25,000 broiler unit were used is imported into both countries, and labour for the “large commercial broiler farms”. rates and building material costs are quite . Costs for laying hen farms were es mated similar, this comparison is generally valid. by local experts at EUR 6–14 per bird, . Beef fa ening farms were assumed to have depending on the level of sophis ca on; per-cow costs equal to half those on dairy overall a fi gure of EUR 12 has been used. It farms of corresponding size, refl ec ng similar is assumed that existing facilities will need needs for manure storage and machinery, to invest some 60 percent of this sum, since but lower investment requirements for in most cases they will need to replace buildings and none for milkrelated facili es. exis ng cages with new EU-compliant Farm types that combined breeding cows “enriched cages”, which will in turn require and fa ening ca le used a combina on of new systems for feed, water and manure the two sets of costs. collec on. . Costs for breeding sheep farms have been es mated by local experts at around 9.7.3 Investment requirements EUR 150/ewe, including relatively basic Based on the above projec ons of farm buildings with lighting and ventilation, and animal numbers, and on the es mated facilities for feed and water, manure storage investment costs per head, the following total and a disinfectant barrier. It is expected that investment needs have been calculated: farms would make little investment in their existing facilities, perhaps just improving Table 9.5: Total investment needs manure storage, so these have been Species Investment need priced at 15 percent of the cost of a new or expanded building. The rela vely rare Ca le EUR 580 million (300 m KM) system of “commercial sheep fa ening” Sheep EUR 98 million (50 m KM) has been costed at half the rate for ewes, Pigs EUR 230 million (120 m KM) based on the higher stocking density for Poultry EUR 96 million (49 m KM) fa ening lambs and the fact that many of these facili es will operate only during As might be expected, the greatest investment the summer and hence have no livestock need is in the ca le sector, with 85 percent of buildings. the total investment applying to dairy farms. . Costs for pig farms were based on Rather more surprisingly, the second largest investment analysis of breeding and investment need is for the pig sector, driven fa ening enterprises studied during the by the expressed inten on of con nuing Pilot Farm Survey in BiH. This generated farms to expand markedly. a cost per pig based on construc on of an en rely new enterprise. Upgrading of Sheep and poultry show very similar total exis ng pig places was assumed to cost investment needs, each at just under 25 percent of this amount (predominantly EUR 100 million, but reflecting rather for EU-compliant manure storage systems, different scenarios: investment in the sheep plus some increase in space per pig to meet and broiler poultry sectors is for relatively

189 low amounts per head but for an increase Several important conclusions stem from this of around 50 percent in total fl ock sizes; table: investment in laying hens refl ects a more . The sector in greatest need of investment – modest 16 percent increase in fl ock size but dairying – will benefi t rela vely li le from a signifi cant upgrading of facili es to comply IPARD due to the very small size structure with new EU requirements. of its farms. This indicates a major gap for IPARD-eligible investment na onal measures and commercial credit providers to fi ll. Whilst the maximum and minimum . In theory, the sheep sector could benefi t enterprise sizes will be defi ned in the BiH considerably from IPARD due to the IPARD programme, experience from other presence of a signifi cant number of large countries suggests that only the larger farms fl ocks. However, quite a lot of the sheep are successful in applying for IPARD funding. trade is s ll a cash business and so it is It is therefore assumed that most of the ques onable how many of these farms IPARD applica ons will come from a rela vely could provide the necessary accoun ng narrow range of farm types: history and VAT registra on. . Ca le: . The pig sector will be heavily aff ected by EU accession, but at least some of the farms • Large dairy farms (20–100 cows) are large enough to make use of IPARD Corporate dairy farms (> 100 cows) • resources to help them prepare for what • Large beef fa ening farms (> 20 ca le) lies ahead. . Sheep: . The farms that may benefi t most from IPARD • Large sheep breeding farms (> 100 ewes) funding are the top end of the very bimodal . Pigs: poultry sector. Whilst these represent just • The larger operators amongst the half of one percent of all holdings with commercial breeding, fa ening and chickens, they account for almost two-thirds breeding-fa ening farms, accoun ng for of all birds. These holdings are already run 5 percent of the farms and 40 percent of as professional businesses and so should the pigs within these farm types be well placed to meet the administra ve requirements of the IPARD system. . Poultry: • Large laying hen farms (> 500 laying hens) 9.8 Conclusions: Investment needs • Large broiler farms (> 1,000 broilers per and priori es cycle) The consulta on and analysis reported above On this basis, the total “pool” of poten al leads to the following priority investments for IPARD applicants is es mated as follows: livestock farms and processing facili es.

Table 9.6: Total “pool” of poten al IPARD applicants

Number and share Number and share Investment per Species Total investment of farms of animals farm Ca le 200 (0.2%) 29,000 (9%) EUR 19 million EUR 97,000 Sheep 880 (2.2%) 450,000 (31%) EUR 32 million EUR 36,000 Pigs 1,000 (0.4%) 130,000 (14%) EUR 93 million EUR 94,000 Poultry 450 (0.5%) 9.8 million (62%) EUR 41 million EUR 90,000 Total 2,330 farms - EUR 185 million EUR 73,000

190 9.8.1 Priority investments on farms . Similar upgrading of large beef fa ening farms in rela on to manure, silage and Ca le forage machinery. . Enlargement of small dairy farms to Sheep reach a minimum size that can jus fy the investments necessary to meet EU milk . Increasing effi ciency and produc vity of hygiene standards (essen ally requiring larger sheep farms through: na onal ac on since these farms are too • Construc on or re-construc on of small to par cipate eff ec vely in IPARD). In buildings on larger sheep farms to allow the short term, a valid minimum might be 6 over-wintering and earlier lambing; cows (i.e. the bo om end of the “medium • Renewing and upgrading machinery for dairy farm” range), since even this small producing, conserving and handling forage. number will help to spread the costs of a proper milking machine, cooling tank and Pigs basic building improvements. However, no young person would be advised to enter . Upgrading of buildings on larger pig farms to dairying if they were likely to be limited to improve effi ciency and meet EU standards, such a small herd; they would do be er to including: set their sights on becoming a “large dairy • Adapta on of pens for sows and piglets farm” of 20–100 cows; in order to meet EU animal welfare . Upgrading of large, medium and standards; formerly small family dairy farms to meet • Expansion of fa ening units where EU standards and improve effi ciency. This necessary to meet minimum EU space will include: requirements per pig; • Upgrading ca le buildings to improve • Installa on or upgrading of automated hygiene, animal welfare and ease of equipment for feeding and ven la on; opera on; • Improving manure storage facili es. • Upgrading or replacing milking and milk . Providing equipment for transport and cooling equipment in order to improve spreading of manure. hygiene; Poultry • Adap ng buildings to provide a separate hygienic space for milk handling and . Upgrading of buildings on larger commercial storage; layer farms in order to meet EU standards, • Improving or construc ng manure storage par cularly for animal welfare. This will facili es and providing equipment for include replacement of tradi onal ba ery transport and spreading of slurry and cages with EU-compliant “enriched cages”; solid manure; . Upgrading of larger broiler units to comply • Improving silage clamps (where used) to with lower EU stocking density limits and avoid pollu on by effl uent; other animal welfare requirements; • Renewing and upgrading machinery for . Expansion of (layer and broiler) buildings to producing, conserving and handling forage. allow all at least the exis ng capacity at the . Suppor ng con nued expansion of medium- new lower stocking densi es; sized dairy farms, including livestock, . Upgrading of automated equipment for machinery, buildings and land (not all of feeding, watering, ven la on and climate which are eligible for IPARD support). control; . Upgrading of facili es for manure storage, . Improving facili es for storage of poultry handling and disposal on the largest (usually manure and provision of machinery for corporate) dairy farms. manure transport and spreading.

191 All species Visits to meat and dairy processors indicated that most businesses are able to fund their own . Upgrading the general machinery pool, in investments in processing and packaging. This par cular through the provision of more will be accomplished gradually as processors modern tractors. respond to new market opportuni es and 9.8.2 Priority investments in processing the progressive harmoniza on of regula ons during the pre-accession process. . Effl uent and waste-water treatment, at least as a pre-treatment process prior to Processors do require investment in the discharge into municipal facili es; collec on, treatment and disposal of factory effl uent. There also needs to be improvement . Disposal of solid waste from meat in waste management, especially concerning processing, via one or more rendering meat and aba oirs. Such improvements will plants; help environmental protec on and will bring . Upgrading or building new slaughterhouses; some cost savings, but processors will see less . Upgrading of technology where appropriate, immediate benefi ts than from investment in including packaging equipment. new processing or packaging equipment, and so there may be a greater role for IPARD and other forms of preferen al funding.

192 10. Iden ﬁ ca on of training needs in the sector

This chapter looks at the needs for training, and 74primaryagriculturaladvisers will be advice and underpinning knowledge services employed, with extension being delivered for the livestock sector. through both public and private extension . Sec on 10.1 briefl y reviews the exis ng services. The public advisory service is systems of informa on, training and advice, fi nanced from the budget, and private as the primary systems through which services from their own resources and future training will be delivered. revenue genera on, and they both need a licence for the provision of advisory services. . Sec on 10.2 discusses the need for training at all levels in understanding EU regula ons Such strategies are clearly a good start but and systems in agriculture. considerable a en on and investment will be . Sec on 10.3 iden fi es the most pressing needed in order to develop a system capable training needs for farmers. of mee ng the needs of several hundred . Sec on 10.4 discusses the training needs of thousand producers, par cularly to ensure meat and dairy processors. that the small farms which form the backbone of the livestock sector receive adequate and . Sec on 10.5 considers the training that inspectors will need if they are to play their appropriate support. It will also be important part in developing a compe ve and EU- to resist the danger that threatens many ready livestock sector. extension services in the region: that of being “hijacked” into an implementa on and . Sec on 10.6 presents overall conclusions enforcement service for IPARD and EU-like on the needs for training and advice. support measures, at the cost of providing the 10.1 Current sources of informa on, high quality and impar al advice on technical training and advice and business ma ers that is so desperately needed. Agricultural extension Market informa on One of the earlier EU support projects helped to set up systems of agricultural extension in In BiH, an EU PHARE project established an each en ty. A er comple on of the project, opera onal Agricultural Market Informa on RS con nued with an en ty level system whilst System (AMIS), in the period 1998 to 2000. FBiH transferred the responsibility – along The collec on, analysis and exchange of with the extension staff – to the canton level. informa on was organized according to EU Brčko District employs three advisors (“senior standards and operated through the exis ng expert associates” in crop produc on, fruit network of agriculture extension services produc on and ca le produc on) within the in RS and FBiH. Upon comple on of the EU Department for Agriculture, Forestry and PHARE project in December 2000 the system Water Management. The general feedback stopped working due to the lack of further from stakeholders, in individual discussion as funding and lack of understanding of the well as in the formal SWOT workshops, is that importance of this project. extension is one of the weak points within In 2008, the ac vity of building an Agriculture the agricultural system, par cularly in FBiH. Market Informa on System started again, Some recent support has been provided this me supported by a USAID project. A by the World Bank, and in 2010 both en ty working group was established, including governments adopted their own mid-term representa ves of the en ty ministries, development strategies for extension services MOFTER and other stakeholders, to discuss in agriculture. The strategy for RS envisages general issues such as the legal basis for the that by 2015 twenty new specialist consultants establishment of the system, data collec on,

193 selec on of repor ng centres, and training of interna onal and nongovernmental projects, operators. covering diverse aspects of agricultural, rural and general business development. Many of Since the Federa on does not currently have the best informed people in the country have an en ty-wide agricultural extension service, made maximum use of this valuable source of it has not yet been possible to implement informa on and training. the market informa on system across the en re country. However, foreign donors 10.2 Generic training in EU and funding organiza ons have made it a awareness condi on of their fi nancial support that one system should be established throughout BiH, Two consistent fi ndings throughout the study in order to avoid the costs and ineffi ciency of are that stakeholders at all levels – from having two separate systems and to support farmers to policy-makers – are expressing the the opera on of the single economic space. desire to be er understand the EU agricultural Therefore development of the system has not acquis, and that misconcep ons are at least progressed in either en ty. as common as accurate understanding of EU systems. There is clear scope for an organized, The World Bank-funded Agriculture and Rural impar al and ongoing campaign to make Development Project (ARDP), implemented stakeholders aware of the ever-changing by Agriculture Project Coordina on Units in RS aquis. Two of the most pressing areas for and FBiH, is currently suppor ng AMIS within such support will be in understanding the its overall project ac vity on development of complex processes of expor ng to the EU and agriculture informa on systems. A specifi c of benefi ng from future IPARD support. It EUfunded project on AMIS is planned under is especially important that producers and IPA-2009 but has not yet started. processors contempla ng major investments, In the mean me, policy-makers do not with or without IPARD funds, ensure that have access to mely market informa on in their new facili es can comply with current order to help them develop and implement and likely future EU standards. eff ec ve policies. Even more seriously, The EU itself would seem the most obvious there is no opera onal system to help small organiza on to fund such a campaign, but it producers nego ate more equally with larger is important that stakeholders are helped to and typically be er informed processors understand the costs and risks, as well as the and traders, and thus to ensure the proper benefi ts and opportuni es, and are given a opera on of agricultural markets. realis c picture of what to expect and how Training and educa on to respond to it. Thus actual delivery would be be er carried out by an independent Before the war, Bosnia and Herzegovina organiza on, even if ul mately funded by shared the Yugoslav-wide system of the EU. agricultural high schools, higher schools and facul es. The state of agricultural schools was 10.3 Training of farmers not inves gated, but higher educa on is now The most important thing for farmers to learn carried out through facul es of agriculture in is not how to work the EU system, but how to Sarajevo, Banja Luka and Mostar, all of which produce and market be er, or more simply, were key partners in the prepara on of these how to become be er farmers. sectoral studies. The main topics on which livestock farmers Projects and NGOs need to improve their knowledge are: Whilst BiH falls behind many of its neighbours in . Feeding (all species) – In almost every terms of the func oning of formal ins tu ons, livestock system, the biggest single cost is it has been and con nues to be well served by purchased feed, and the main factor limi ng

194 produc on is the intake of nutrients. Thus • Although not strictly forage, this topic improvements in feeding will contribute should also include the use of low- directly to higher output and profi ts. cost bulk feeds such as brewers’ grains, Specifi c training topics include: sugar-beet pulp and other processing • Op mum ra on formula on in response byproducts. to: . Milking and mas s (milking cows, sheep » Feed availability and cost; and goats) – EU hygiene standards require comple on of the cold chain and control » Gene c poten al and stage of lacta on/ of mas s, which will also increase yields growth; and longevity. This requires good milking » Market demand for e.g. carcass weight, machines, cooling tanks, hygienic buildings backfat class, milk fat. and be er management. Without these • Nutri on of replacement stock to ensure improvements, milk will be unmarketable that they commence breeding at the right once Bosnia and Herzegovina enters the EU. me and in the right condi on (especially Specifi c training topics include: ca le and sheep). • EU, state and en ty standards for milk . Forage produc on and conserva on (ca le quality; and sheep) – Research and survey results • Sources of bacterial contamina on, eff ect throughout the world show the over-riding of temperature on growth of TBC; economic benefi ts of producing milk and meat from rela vely cheap forage instead of • Causes, preven on and treatment of expensive concentrate. Whilst the benefi ts mas s; are well-known amongst researchers and • Building design and maintenance for leading farmers, eff ec ve produc on and clean milk produc on; use of forage is a surprisingly complex • Milking hygiene, including maintenance of business, demanding a lot more of the equipment, disinfec on, and procedures farmer than simply buying and feeding before, during and a er milking. more concentrate. Thus farmers will need . Fer lity and breeding (all species) to be shown and convinced of the benefi ts before they are likely to make the changes • For ca le, reducing the interval between required, sugges ng that research and each calving will increase average yield demonstra on ac vi es must be run in per lacta on and total meat output, whilst parallel with extension and training. con nued and increased use of ar fi cial Specifi c topics for demonstra on and insemina on will be the most cost- training include: eff ec ve means of gene c improvement for the large majority of farms. Improved • Choice of forage species, variety, fer lizer nutri on and management of rearing levels and cul va on prac ces; heifers will increase feed intake and milk • Management of natural pastures and produc on in their fi rst few lacta ons. As meadows; farms enlarge and intensify, the choice • Forage conserva on techniques and between the tradi onal Simmental and the cu ng dates – including use of big- more produc ve but demanding Holstein- bale silage and an understanding of Friesian will need to be considered. the determinants and eff ects of forage • For sheep, the ming of lambing has a diges bility; big eff ect on market value, whilst breed • Use of urea-treated straw as a source of selec on needs to take account of non-protein nitrogen; changing market demand. • Developing op mum ra ons to u lize the • For serious pig and poultry producers forage available; who hope to compete with imports from

195 the EU, choice of gene c material will the costs and returns of upgrading to be one of the keys to success, though in produce EU-standard milk; prac ce much of the lead may be taken • Choice of market outlet – whether to by commercial companies working with supply dairies, green markets or to sell contracted producers. direct; understanding and working with Specifi c training topics include: dairy contracts; • Replacement and culling policy; • Gross margins and forage variable costs, • Heat detec on, causes and cures of as tools for planning and measuring the anoestrus and infer lity; farm’s performance, and as benchmarks against which to compare; • Semen selec on; • Management and organiza on of the Management and feeding of replacement • farm, its land, labour, livestock and other females; resources; Housing for young stock. • • Record-keeping and accoun ng; . Disease control (all species) – Control of • Prepara on of business plans and zoono c and epizoo c disease is important applica ons for credits and grants, for interna onal and EU trade, whilst be er ul mately including applying for IPARD hoof care and parasite control will increase support. produc vity. Specifi c training topics include: If training of farmers follows the “80:20” rule, • Nutri on and health, including metabolic with 80 percent of the outputs coming from disorders and the use of supplements; just 20 percent of the inputs, then the three • Recogni on of epizoo c disease and changes that will have the most impact on procedures to follow if suspected; farmers’ profi ts are these: • Parasite control; 1. Producing high yields of good quality fresh and conserved forage; • Causes, preven on and cure of lameness and hoof problems. 2. Selec ng the right types and amounts of feed to use; and, for dairy farmers... . Animal welfare (all species) – Awareness of EU regula ons applying to farmed animals 3. Achieving EU standards for TBC and SCC. in general and to pigs, calves and poultry in If a training programme did no more than par cular. help farmers improve in these three areas, it Specifi c training topics include: would be well worthwhile. • Design of livestock buildings to ensure current and future compliance with 10.4 Training of processors EU requirements; Processors of milk and meat have training • Management issues aff ec ng the welfare of each species; needs which are mainly related to the size and capacity of their businesses, which determine • Welfare during transport and slaughter. the variety of disciplines required. For example, . Farm management (all) – Before addressing the large majority of processing businesses are any of the above issues, the farmer needs to family-owned, usually by at least the second be sure that he is producing the right thing genera on. Their main requirements are for the right market. Good understanding of readily met by in-house or on-the-job training, income and costs is essen al for profi table partly because academic qualifi ca ons are produc on. less important in this environment and partly Specifi c training topics include: because of the reduced opportunity for full- • Choice of produc on system – specialist me study where the senior management dairy, beef or combined – in rela on to will always consist of family members.

196 However, this emphasis on prac cal skills . EU standards and procedures – Upda ng over academic educa on may reveal itself as and extending processors’ knowledge on a weakness when processors need to prepare what EU integra on will mean for them. business plans to seek bank or IPARD funding, Specifi c training topics include: and so considerable support may be needed • EU standards for raw milk, milk processing in this area. plants and dairy products; Larger companies take on higher numbers • EU standards for slaughterhouses and of employees, and are usually less likely to meat processing plants; be family businesses. Comments by some • The inspec on and approval process for of their directors do not refl ect well on the expor ng to the EU, including the role of current training role and func on of the na onal and EU authori es. universi es; for example, university teaching . Hygienic infrastructure and opera on – staff are infrequent visitors to processing The requirements for buildings, equipment plants of both milk and meat, and are and transport, in order to produce to EU perceived as passive partners in the agro- standards. processing industry. Specifi c training topics include: A empts have been made by processors to • EU-compliant building design; secure students as appren ces, to provide • Plant maintenance and control; them with experience of industry whilst • Sampling and control points (e.g. con nuing their academic studies. So far the slaughterhouse water, fi nished products); success of this ini a ve has been negligible, • Developing and implemen ng a HACCP and there is a growing feeling that the plan. universi es are out of touch with technical . Raw milk sampling and tes ng – Ensuring ma ers and new developments in technology. that all milk is tested in line with EU and Another comment relates to the lack of na onal legisla on. technical knowledge related to processing Specifi c training topics include: within the universi es, as most teaching staff • Establishment of an EU-compliant milk are academic rather than industrial experts. laboratory, including building design, There is a need, therefore, for a fresh equipment requirements, and sources of approach to technical educa on and training specialist support; for the food processing industries, preparing • Laboratory opera on and quality control, tailor-made courses to meet the needs of including accredita on and par cipa on industry. This requires full consulta on of in na onal ring-tes ng; industry, which should be encouraged to off er • Organiza on of milk sampling, sample prac cal and paid experience to students. collec on, and calcula on of geometric A star ng point might be with “sandwich” averages; courses, where periods of work experience • Design and implementa on of quality are alternated with study at a selected college based payment schemes; or faculty. Prepara on for any course will • Public and private sector op ons for need to involve a familiariza on period for small dairies unable to establish their teaching staff , to harmonize the needs and own laboratories. aspira ons of both students and industry. . Business management – How to ensure Within the milk sector, many dairies are now that the business operates as profi tably as an important source of training to farmers, possible. Financing upgrading and growth. but they s ll have their own training needs, Specifi c training topics include: as do meat processors. A comprehensive list • Process management, use of fat balances, of training needs would include: waste management;

197 • Environmental considera ons, including 10.6 Conclusions on training needs effl uent management, treatment and disposal; The EU future to which Bosnia and Herzegovina aspires will be very different • Health and safety at work; to the situation in the livestock sector • Good Manufacturing Prac ces, including today, which means change – change by quality management and quality assurance; farmers, change by processors, and change • Stock and inventory control; by all of the institutions that support, • General business management, guide and regulate the sector. Extension employment law and marke ng; and training can play a vital role in helping • Sources of funding, including na onal operators to prepare for this change and to and interna onal support, in future make a successful transition to the more poten ally including IPARD measures. demanding and more competitive future that lies ahead. 10.5 Training of inspectors Processors are already starting to prepare Given the fragmented nature of the veterinary for the EU Single Market and are actively inspec on services (see sec on 5.5) it can seeking out the information they need, reasonably be assumed that many inspectors but can be further helped by a systematic are not supported with regular training and training programme as outlined in upda ng of their knowledge. Inspectors section10.4 above. should be involved in almost all of the Farmers generally have much further to training issues iden fi ed for processors in the go, par cularly to bring their yields and previous sec on, par cularly those rela ng to technical effi ciency up to the level of their EU standards and procedures, and there could EU compe tors. It appears that government be many benefi ts from bringing operators and is largely failing them in this respect, with inspectors together in some training courses. extension services woefully inadequate In addi on, inspectors should be provided to meet the needs of more than 300,000 with training and instruc on manuals on: livestock producers and with no public market . Selec on of premises to be inspected, informa on service. These must be treated as including risk analysis; high priori es for the whole sector. . Inspec on methodology, with checklists to be employed; A smaller but very important training need is that of preparing inspectors and their . Follow-up ac ons, with standard format ins tu ons to work with EU standards. Quite documents such as visit report forms and a lot of training is being provided through EU improvement no ces. and other interna onal projects, but it might This training should be linked to a wider also be benefi cial to design and implement a improvement of the inspec on system and targeted training programme as proposed in its suppor ng informa on systems. sec on 10.4 above.

198 11. Outcomes

This study has progressively developed its 11.1.2 Key constraints analysis of the BiH livestock sector over the preceding nine chapters, with Chapter 9 in The main constraints iden fi ed in the SWOT par cular reviewing the strengths, weaknesses workshops, farm visits and stakeholder and investment needs of the diff erent farm consulta on (see also Chapter 9 above) were: types. Therefore this chapter does not seek . Producers: to repeat this analysis, but instead concisely • Limited access to land for expansion summarizes the main conclusions aff ec ng (especially for ca le farms) investment and then concentrates on giving • Limited access to capital clear recommenda ons for development • Low technical performance makes it hard of the IPARD programme in Bosnia and to fund investment Herzegovina. • Small size distribu on of farms; poultry 11.1 Summary of key factors concentrated infl uencing investment . Processors: • Limited access to capital (though Three key factors that must feed into the design processors indicate fl exibility and a of the IPARD programme are investment proac ve approach to obtaining fi nance). needs, constraints to be overcome, and the underlying structure of the industry. 11.1.3 Farm size distribu on 11.1.1 Key investment needs The farm size distribu on (analysed extensively in Chapter 3) has a cri cal bearing The project farm survey, SWOT workshops and on the kinds of investment that are needed, consulta on with stakeholders iden fi ed the aff ordable, and appropriate for IPARD following key investment needs (as discussed funding: in greater detail in Chapter 9 above): . Ca le (160,000 holdings) . Producers: • 1–5 cows = 99 percent of farms, 91 • Herd/fl ock enlargement (livestock not percent of cows eligible for IPARD) • > 20 cows = 0.1 percent of farms, • Buildings and equipment (especially dairy) 0.9 percent of cows • Machinery (especially forage) » Major structural problem in dairy • Manure storage and handling (especially produc on, with a need to help smaller ca le and pigs) farms adapt to the changing situa on; . Dairy processors: less serious situa on in beef produc on. • Plant upgrading to improve opera ng . Sheep (50,000 holdings) effi ciency and product range • 1–20 sheep = 81 percent of farms, 30 • In-house laboratories to improve product percent of sheep quality • > 100 sheep = 1.9 percent of farms, • Effl uent storage and treatment to meet 26 percent of sheep environmental standards » Less serious structural problem, as even . Meat processors: smaller farms can be EUcompliant and • Plant upgrading to improve opera ng commercially viable, though only the effi ciency larger farms are likely to par cipate in • Animal waste storage, transport and IPARD. disposal . Pigs (130,000 holdings; approx. numbers):

199 • 1–20 sows = 95 percent of breeding . Processing and marke ng of agricultural farms, 83 percent of sows products (103): • > 50 sows = 0.7 percent of breeding • 103/1. Improvement of processing farms, 5.5 percent of sows facili es » Big problem of compe veness, which • 103/2: Dairy effl uent storage and is likely to see many small pig farms treatment cease produc on; only the larger farms • 103/3: Animal waste collec on and are likely to have a longterm commercial processing future, and these could benefi t greatly from IPARD assistance. Each measure is discussed under three main headings: . Poultry (220,000 holdings; very approx. numbers) . Objec ve – What kinds of investment the measure would support and what it would • Laying hens: set out to achieve. • < 500 layers = 99.9 percent of farms, . 29 percent of layers Eligible expenditure – The kinds of investment that would be eligible for IPARD • > 5,000 layers = 0.1 percent of farms, support under the measure; in some cases 71 percent of layers farms would also make other investments, » Current bi-modal structure is such as purchase of livestock, which cannot sustainable, as the many small farms be supported through IPARD. are essen ally non-commercial; many . Eligible size by end of investment – This large commercial farms will require sets out, as it says, the business size to be substan al assistance to adapt to EU achieved by the end of the investment; in standards. some cases smaller farms or businesses • Broilers: might apply for support, with a business • < 200 broilers = 99 percent of farms, plan that includes enlargement up to at 6 percent of broilers least the minimum eligible size. • > 1,000 broilers = 1 percent of farms, . Es mated number of poten al applicants 94 percent of broilers – This sec on brings in the numbers from » Smaller broiler farms have li le Chapters 3 and 4 to es mate how many commercial future; IPARD investment operators are currently within or close to the should focus on helping large broiler eligible size range for each measure. Only a farms to adapt to EU standards, increase propor on of these would actually choose effi ciency and con nue to expand. to apply, so these numbers set upper bounds on the expected number of applicants. 11.2 Proposed IPARD measures It should be noted that the proposed The following six measures are proposed for measures deliberately make no reference to implementa on in Bosnia and Herzegovina; business type, and all measures should be each is discussed further in the following open equally to private farms and all kinds of sec ons: legal en es such as companies, associa ons and coopera ves. . Moderniza on of agricultural holdings (101): 11.2.1 Measure 101/1: Improvement • 101/1: Improvement and enlargement of and enlargement of agricultural agricultural holdings holdings • 101/2: Manure storage and disposal . Objec ve: General investment with the aim • 101/3: Forage machinery of helping holdings to:

200 • Meet EU hygiene, welfare and/or • Poultry: There are around 190 laying environmental standards fl ocks within the proposed size band, all • Increase compe veness through of which have at least 5,000 birds (the increase in herd/fl ock size and more surveys found that laying fl ocks had either effi cient opera on less than 500 or more than 5,000 birds). An es mate 300 broiler farms reach at . Eligible expenditure: least the minimum size threshold, and • (Re)construc on of buildings a few of them may already exceed the • Construc on of manure storage facili es maximum size limit. Most of these 300 • Purchase of machinery and fi xed farms currently produce 15,000 broilers equipment per cycle, and would probably wish to expand as well as improve their facili es. . Eligible size by end of investment: • 20–200 cows or fa ening ca le 11.2.2 Measure 101/2: Manure storage • 100–5,000 ewes and disposal • 20–500 sows . Objec ve: Simplifi ed measure specifi cally • 200–5,000 fa ening pigs per cycle to reduce pollu on aimed at farms that • 500–50,000 laying hens are either too large or too small to apply successfully under 101/1. • 1,000–100,000 broilers per cycle . Eligible expenditure: . Es mated number of poten al applicants: • Construc on of manure storage facili es • Ca le: There are around 100 dairy farms Purchase of machinery for collec ng and and 130 beef farms currently within the • spreading manure and slurry eligible size band, together with around 300 slightly smaller dairy farms that . Eligible size by end of investment: might manage to expand up to 20 cows. • 10+ cows Together they represent around one- • 10+ sows third of a percent of all ca le farms and • 20+ fa ening pigs per cycle 5 percent of all cows. • 500+ laying hens • Sheep: There are around 1,000 sheep • 1,000 + broilers per cycle farms in the eligible size range, with approximately a quarter of all sheep. . Es mated number of poten al applicants: However, many of these farms may • The number of farms that fall above choose to con nue with rela vely the maximum size thresholds proposed extensive and informal produc on, and for measure 101/1 is extremely small: only a minority are expected to pursue perhaps 30 ca le farms and few, if any, IPARD funding. sheep or pig farms, whilst it is not known how many of the 25 legal units in the • Pigs: The survey data did not discover any private pig farms within the eligible size poultry sector have more than 50,000 range, so most of the applicants would laying hens or 100,000 broilers. come from amongst the approximately • However, extending the simplifi ed 24 Legal Units that keep pigs. However, measure to smaller farms could around 3 percent of all private pig farms poten ally lead to a large increase in the (just under 4,000) have 10–20 sows and number of applicants, with up to 2,000 so might choose to expand up to the extra ca le farms and perhaps a similar eligible minimum of 20. Together they number of pig farms. represent around 3 percent of all pig • For poultry, this measure would not set farms and 20 percent of all pigs. a new lower limit, but off er a simpler

201 applica on procedure be er suited • Five dairies and four meat processors are to some of the smaller fl ocks already known to be within this size range. included in the numbers es mated for measure 101/1. 11.2.5 Measure 103/2: Dairy effl uent storage and treatment 11.2.3 Measure 101/3: Forage machinery . Objec ve: Simplifi ed measure specifi cally to reduce pollu on aimed at processors . Objec ve: Specifi c measure to provide that are too large to apply under 103/1. machinery for making and handling big- . Eligible expenditure: bale silage and other kinds of forage, to anyone who will cover a reasonable area, • Construc on/upgrading of effl uent e.g. machinery rings, farmers’ associa ons storage and treatment facili es and private contrac ng services (individual . Eligible size by end of investment: farmers would apply under measure 101/1). • At least 20 tonnes of waste water per day. . Eligible expenditure: . Es mated number of poten al applicants: • Forage handling machinery and • Approximately eight processors. associated tractors and trailers . Eligible size by end of investment: 11.2.6 Measure 103/3: Animal waste collec on and processing • Demonstrated capacity and business plan to harvest at least 100 ha of forage for . Objec ve: Investment for the safe collec on mul ple holdings and disposal of animal waste in line with EU standards for public and animal health and 11.2.4 Measure 103/1: Improvement of the environment processing facili es . Eligible expenditure: . Objec ve: General investment with the aim • Construc on of rendering plant of helping dairies and meat plants to: • Vehicles for transport of animal waste • Meet EU hygiene, welfare and/or • (Storage at plants is eligible under 103/1) environmental standards . Eligible size by end of investment: • Increase compe veness through • Not applicable – would probably be one increased size, more effi cient opera on or two central facili es to serve many and increased product range. operators. . Eligible expenditure: . Es mated number of poten al applicants: • (Re)construc on of buildings • Depends on poli cal choices between • Purchase of machinery and fi xed private and public investment, with the equipment la er approach like to generate either one • Construc on/upgrading of effl uent na onal or two regional rendering plants. storage and treatment facili es 11.2.7 Measures considered but • Construc on/upgrading of in-house laboratories for rapid tes ng of incoming rejected milk and for checking fi nal products A number of possible measures were . Eligible size by end of investment: considered by the study team but eventually • Dairies opera ng regularly at more than rejected, for the reasons given below: fi ve tonnes daily milk intake. . Milk collec ng centres – Rejected as the • Meat processors producing at least fi ve milk cooling problem has largely been tonnes of products per day. solved, at least for farms currently supplying . Es mated number of poten al applicants: dairies.

202 . Livestock markets – Appear to be necessary, trade and access to EU markets. As discussed but experience shows very few successful in Chapter 5, there are a number of areas examples of donor-established livestock in which BiH could improve, with the most markets. urgent being the ac ons necessary to secure . Establishment of coopera ves and access to EU markets for livestock products. associa ons – Again, the experience of donor- It is also noted that the majority of domes c established associa ons is not good; however, livestock support currently goes on input, coopera ves and associa ons would be output and produc on subsidies that have eligible to apply for any relevant measure. li le eff ect on helping the sector to change Possible measures to assist livestock and become more compe ve. When Bosnia producers to diversify into other ac vi es and Herzegovina does enter the EU, it will were also discussed, but the elabora on of have to adopt the EU’s Common Agricultural measures has been le to the specifi c sector Policy in whatever form it then takes, but study on diversifi ca on. un l accession the country has a window in which to apply “smart” subsidies that will 11.3 Suppor ng ac ons to prepare help to restructure the sector and prepare it the sector for EU accession for the opportuni es and challenges of the EU Single Market. Whilst the main focus of this study has been on investment needs and the role that IPARD 11.3.2 Improving effi ciency through might play, there are two other areas that extension and training will be essen al to the future success of the livestock sector in Bosnia and Herzegovina: In preparing to face these opportuni es and challenges, it is the farmers and processors . Policy and regula on themselves who will have to change the most, . Research, extension and training and here a vital role can and should be played 11.3.1 Improving the policy and by the extension services. As discussed in Chapter 10, there is a whole list of areas in regulatory environment which extension, training and extension are There are some tasks essen al to the livestock required – and are generally not being given. sector that only government can undertake, This should be treated by government as one including se ng and implemen ng of the top priori es for the en re sector, and regula ons, and nego a ng for interna onal given the funding and a en on that it needs.

203 204 ANNEX 1

Analysis of Poultry Numbers

I. The problem Several specifi c factors aff ect es mates of the number of chickens in Bosnia and Herzegovina: 1. The sector is characterized by a very large number of small producers and a small number of very large producers who hold most of the poultry; these large producers tend to be concentrated in a few regions and villages. The sample-based sta s cs are likely to overes mate the number of poultry if they include one of these clusters of large farms, and to underes mate them if they do not; thus sample-based sta s cs (such as the Master Sample) are subject to a high degree of sampling error. 2. However, most of the large producers are legal en es, which are – at least in theory – subject to 100 percent annual repor ng to the en ty sta s cal offi ces. 3. The broiler produc on cycle involves around 43 days of rearing one batch of hens, followed by around 15 days to clean and disinfect the house, with the whole cycle repeated approximately six mes per year. Thus a producer with four houses each containing 15,000 broilers would, on average, have three occupied and one empty at any me, resul ng in three possible sta s cal measurements: a. Repor ng the number of poultry present on the holding on the day of the survey or census would give the number 45,000 (15,000 × 3); b. Repor ng the u lized broiler capacity would give the number 60,000 (15,000 × 4); c. Repor ng the annual throughput of broilers would give the number 360,000 (15,000 × 4 × 6). 4. Many sta s cs do not dis nguish between broiler chickens (with a life cycle of around 40 days), laying hens (with a laying cycle of around 40 weeks), and other poultry (such as turkeys, ducks and geese), though the la er are not believed to be very signifi cant in Bosnia and Herzegovina. 5. Backyard and small-scale produc on is quite seasonal; the Master Sample data were collected around the end of June 2009, when the poultry popula on is at its annual high, and offi cial sta s cs are collected at the end of December, when the popula on is at its annual low. Thus all poultry sta s cs must be examined carefully to check how they were obtained and what defi ni ons were used.

II. Available data 1. Published sta s cs The following table show the oﬃ cial sta s cs for poultry numbers in 2010, with an overall total of 21.6 million:

Poultry class BD FBiH RS Grand Total Breeding females 45,000 1,515,000 2,228,045 3,788,045 Other 755,000 6,983,000 10,076,190 17,814,190 All poultry 800,000 8,498,000 12,304,235 21,602,235

205 2. Master Sample plus reports from legal units The next table shows es mates of the number of poultry on private farms from the Master Sample, together with the numbers of poultry on legal units reported to the sta s cal oﬃ ces; here the total is 12.1 million:

Farm type BD FBIH RS Grand Total Private farms 62,776 2,340,998 3,687,297 6,091,071 Legal units 62,77657 2,475,798 3,496,305 6,034,879 Total 125,552 4,816,796 7,183,602 12,125,950

3. Cross-check with parent stock Broiler hens Representa ves of the poultry associa ons of both en es confi rmed that there are around 250,000 parent stock in BiH, each producing 145–150 eggs per year, hatching into around 130 viable day-old chicks to be reared as broilers. This indicates an annual produc on of 32.5 million broilers, equivalent to 6 cycles per year of 5.4 million broilers per cycle. On any given day an average of ¾ of all broiler houses will be occupied, giving a standing broiler popula on of just over 4 million. Broiler produc on by small farms and rural households will tend to be less intensive, with a longer rearing period to a higher slaughter weight, as well as having a pronounced seasonality of rearing chickens for the slaughter at the beginning of winter. Laying hens The poultry associa ons reported that most laying hens originate from two large farms, each with around 25,000 parent stock producing 80–85 day-old chicks per year, giving an annual throughput of just over 4 million layers. Backyard producers and smaller private farms will tend to keep the same birds for a number of years, whilst large farms and legal units will keep laying birds for around 40 weeks, giving a standing layer popula on of something over 4 million birds. Since the hens’ laying behaviour is infl uenced by day-length, backyard producers without ar fi cial ligh ng will tend to begin produc on at the start of spring and slaughter the old birds in the autumn when their egg produc on begins to decline. 4. Cross-check with slaughter sta s cs Comparing these data with offi cial slaughter sta s cs becomes rather circular, as the object of the exercise is to es mate total poultry produc on, but for the sake of comparison, offi cial sta s cs for registered slaughterhouses only show:

Poultry class Grand Total Broilers 26,638,000 Other 339,000 All poultry 26,977,000

57 Data on legal units were not available for Brčko District. In both the Federa on and Republika Srpska the reported number of poultry on legal units was within 5 percent of the Master Sample es mate for private farms, so the assump on used is that the two values were equal in Brčko District. As less than 5 percent of all poultry are in ques on, any error here will be small compared to the much larger discrepancy between the two tables.

206 5. Comparison with Serbia Although not directly relevant, a comparison with neighbouring Serbia might serve as another useful cross-check: . Popula on of Bosnia and Herzegovina (3.76 million) = 51.5 percent of popula on of Serbia (7.29 million) . Poultry in Serbia on 31 December 2009 = 22.8 million × 51.5 percent gives 11.7 million birds for comparison . Poultry meat produc on in Serbia in 2010 = 84,000 tonnes × 51.5 percent gives 43,000 tonnes for comparison

III. Conclusions Based on the Master Sample data for private farms and households, repor ng to en ty sta s cal oﬃ ces for legal en es, and a cross-check with the number of parent stock, the number of poultry in Bosnia and Herzegovina is es mated as follows: Layers A total of 5.1 million u lized layer places: . 2.7 million kept extensively on households and small private farms (up to 500 laying hens), with each bird being kept for an average of 2.5 years and producing 120 eggs per year; . 2.5 million kept intensively on medium-sized private farms (> 500 laying hens) and legal en es, with each bird kept for an average of one year (40 weeks laying, plus 18 weeks rearing either on the same farm, if bought as day-old chicks, or on a diﬀ erent farm, if bought as point-of-lay pullets) with an average of 183 eggs/bird/year (as shown in sta s cs): • 1.7 million on private farms;58 • 0.8 million on legal units. The number of laying hens on any given day will range from a high of around 5 million in the middle of summer, to a low of around 4 million in the middle of winter. Around 3.4 million old laying hens will be slaughtered each year, resul ng in a meat output of around 7,500 tonnes. Replacement of these hens requires around 3.5 million day-old-chicks per year. Total annual egg output is es mated to total 771 million: . 321 million (41 percent) on households and small private farms; . 306 million (40 percent) on medium-sized private farms; . 144 million (19 percent) on legal units. Assuming that the medium-sized private farms market half of their eggs formally to shops and supermarkets, and half informally through direct sale and at green markets, overall around 60 percent of eggs would be marketed informally and 40 percent formally. Broilers Annual produc on of 32.1 million broilers:

58 The es mate of poultry numbers on medium-sized private farms is the least reliable part of these calcula ons, due to high sampling error caused by the inherent variance of these data and the rela vely small number of such farms in the Master Sample.

207 . 1.2 million on households and small private farms (< 1,000 broiler places) mostly producing just one cycle per year; . 3.0 million on medium-sized private farms (> 1,000 broiler places) producing an average of 3 cycles per year, during the summer;59 . 27.9 million on legal units, producing an average of 5 cycles per year, with some producers reducing throughput in the winter months. Input to these farms requires 33.8 million day-old-chicks per year, and total meat output is es mated at 48,800 tonnes: . 2,400 tonnes from households and small private farms, almost all consumed on-farm or marketed informally; . 4,500 tonnes from medium-sized farms, with perhaps half marketed informally and half sold to registered slaughterhouses; . 41,800 tonnes from legal units, all marketed to registered slaughterhouses. These 32 million broiler hens are produced in a number of cycles per year, so the maximum broiler popula on on any given day is likely to peak at around 7.5 million in summer and drop to 3.8 million in winter. Combined Adding together these two main kinds of poultry produc on gives the following totals: . Number of u lized poultry places = 13.3 million; . Number of poultry slaughtered per year = 35.4 million; . Number of poultry on 31December = 7.7 million, rising to 12.4 million in summer. The published sta s cal value of 21.6 million appears to lie somewhere between the number of poultry present on 31 December and the total annual throughput, possibly due to varying interpreta on of the ques on by diff erent es mators. If there really were 3.8 million layers and 17.8 million broilers present at the end of the year, this would imply a throughput of 80–100 million birds per year, which is far higher than indicated by either the number of parent stock or the slaughter sta s cs. Of the total of 35.4 million hens slaughtered annually, it is es mated that: . 5.4 million (12 percent) are slaughtered informally, on-farm and by butchers and restaurants; . 30.9 million (88 percent) are slaughtered in registered slaughterhouses. This is slightly higher than the 27.0 million reported in offi cial sta s cs, which may refl ect a degree of under- repor ng by slaughterhouses, possibly for tax reasons. Total annual egg produc on is es mated at 771 million, some 11 percent higher than the fi gure of 694,000 given in offi cial sta s cs; this discrepancy is largely due to the higher number of laying hens on private households, the smallest of which were probably not taken into account in the sta s cs.

59 Same comment.

208 ANNEX 2

SWOT Workshop Conclusions

I. SWOT workshop conclusions for • Neglected environmental aspect the meat sector • Poor traceability • Poor yields 1. Strengths • Poorly equipped farms Farms • Slaughtering of young categories of . FBiH livestock • Poten al (pastures) for raising ruminants • Small and fragmented holdings (low • High level of knowledge, equipment and number of head) achievements in poultry produc on • Undeveloped knowledge of producers of • Tradi on in meat produc on and processing their nega ve environmental impact . RS • Low level of technical knowledge in meat • Cheaper produc on of sheep produc on • Good gene c poten al (broilers) . RS • Good natural condi ons • Lack of fa ening capacity (broilers) • Knowledge of producers • Lack of gene c material (pig produc on) • Produc on capacity • Level of technology in primary produc on (broilers) Processing • Tradi onal a tude to produc on . FBiH • Unused natural resources • Tradi on in meat produc on and processing Processing • Suffi cient capacity for accep ng and processing current and future quan es . FBiH of meat • Inadequate health and hygiene control • Suffi cient number of skilled staff along the whole chain . RS • Inadequate technical quality control in • Existence of recognized brands in meat produc on (just hygiene) processing • Poor fi nancial results because of the low level of u liza on of processing capacity Other • Poor traceability . RS • Unsolved problem of dealing with animal • Availability of labour waste 2. Weaknesses Markets Farms . FBiH . FBiH • Poor linkages between producers and • Inadequate breeds for meat produc on processors • Inadequate health and hygiene control . RS along the whole chain • Uncontrolled import • Neglected aspect of animal welfare • Unorganized market

209 Ins tu ons Ins tu ons . FBiH . FBiH • Poor work of the breeding-selec on service • Implementa on of numerous interna onal . RS projects in the fi eld of livestock produc on • Func on of border inspec on posts . RS • Laboratories • Coopera on of small producers • Lack of registers, iden fi ca on • Need for an agricultural chamber • Lack of rendering, solu ons for organic Policy waste . FBiH • Weak role of associa ons • Bosnia’s progress in European integra on Policy • Existence of EU funds for the development . RS of meat produc on • Concessions on agricultural land . RS • No support for young farmers • EU accession • Non-existence of a strategy for commodity • Introduc on of law on SEUROPE standard reserves (pig produc on) • Weak coopera on, associa ons-ministry • Par cipa on in renewable energy sources • Reform of subsidies in livestock produc on Other Other . FBiH • Poor demographic picture in rural areas . RS . RS • Land consolida on (by sugges on and by • Shortage of labour penal es) • Sa sfying the condi ons for producers to 3. Opportuni es receive IPARD funds Farm level • Unifying the quality of agricultural products . RS 4. Threats • Cheaper produc on (more compe ve Farm level ???) • Contracted produc on . RS • Ecological produc on • Livestock diseases • Educa on and training of the sector • Price of inputs in livestock produc on • Vaccina on against classical swine fever Processing level Processing level . RS • Unused exis ng capacity . RS • Linking livestock produc on with other • Sa sfying EU standards ac vi es (tourism, gastronomy, bioenergy) Markets Finance . RS . RS • CEFTA agreement (Ar cle 23) • Be er fi nancial resources • Croa a’s accession to the EU • Use of IPARD funds • Import lobby

210 Finance • Processing and produc on capacity Resources and climate . RS • Tradi ons/Tradi onal products • Procedures for IPARD funds • . RS Ins tu ons • Existence of building for livestock . FBiH placement (barns) • Complicated, long and expensive • Exis ng agricultural machinery and other procedure to obtain a permit for equipment construc ng a building for produc on • Long family tradi on in livestock . RS produc on • Bad administra ve system • Milk producers have economic mo va on for dealing with that produc on • Func oning of ins tu ons at the BiH level • Producers already have knowledge and Policy experience in milk produc on . FBiH • Basic herds of milking cows already exist • Agricultural policy has a social rather than • Available labour (without employment development character opportuni es) • Entry of Croa a into the EU Processing level • Outstanding legisla on in the fi eld of conversion of agricultural land, land . FBiH inheritance and incomplete res tu on • Processing and produc on capacity • Poli cal instability • Tradi ons/Tradi onal products • Undefi ned strategic direc on in . RS produc on (wheat or corn?) • Rela vely regular and stable payment of . RS delivered milk • Ownership rela ons on land Markets • State policy towards the primary and . secondary sectors FBiH • Economic power – export orienta on Other . RS . FBiH • Good milk price (even lower than in the • Corrup on EU and Croa a) • Minefi elds • In most regions condi ons exist for milk collec on (collec on points, etc.) • Poorly developed physical infrastructure • Presence of the grey economy Policy . II. Workshop conclusions for the dairy RS sector • Good breeding origin of cows (as a consequence of post-war import of 1. Strengths heifers) Farm level Other . FBiH . RS • Labour force • Availability of meadows and pastures • Meadows and pastures • Clean (non polluted) nature

211 • Favourable geographical posi on (micro Markets and macro loca on) . FBiH 2. Weaknesses • Exclusive export focus on the Croa an market Farm level • Market skills/product range . FBiH . RS • Farm structure/Fragmented produc on • Credit accessibility (collateral, farm • Household rela onships (gender roles) registra on, balance sheets) • Lack of educa on/age • High prices of raw materials (maize, concentrated feed) • Lack of focus on produc on (wai ng for a job/other op ons; not a choice – Finance a necessity) . FBiH • Produc vity Costs of improving the quality of milk . RS • transport/analy cal services • Fragmenta on of farm holdings (small size, many parcels) Ins tu ons Lack of knowledge for produc on • . FBiH improvement (selec on, feeding, diseases) • Weak level of organiza on of producers . RS • Old-fashioned (extensive) milk produc on technology by some milk producers • Deﬁ cit of agricultural and other specialized extension schools • Poor quality of animal feeding Inadequate animal health protec on • Small herd size (lot of producers with less • than 5 cows) Policy • Lack of own agricultural land (and own . RS animal feed) • High share of elderly households in total • Low milk yield per cow number of milk producers • Lack of specialized machinery (e.g. silo Low interest of youth to con nue combines, hay baling machines, cisterns) • produc on on the family farm • Inadequate facili es for keeping animals (barns) Other • S ll poor breeding structure among a . RS signiﬁ cant number of producers • Lack of water Processing level • Poor botanical structure of meadows

. FBiH 3. Opportuni es • Dairies – unilaterally insuﬃ ciently Farms included (???) • Innova on . FBiH • Variable quality • Development of feeding systems . RS • Fast and powerful increase in produc on • High cost of milk collec on (small • Knowledge transfer quan es, long distances, bad roads) • Services – Ar ﬁ cial insemina on

212 . RS • Empowering extension providers and • Ability of self-employment based on be er accessibility of extension services determina on for milk produc on • Organic produc on of milk (organic farm • Milk processing on the farm cer ﬁ ca on) • Produc on of indigenous milk products • Improving and increasingly applying (kajmak, cheeses) entrepreneurial knowledge and skills (cost management, management) • Produc on of own oﬀ spring (be er adapted and cost reduc on) Policy • Possibili es of increased fodder produc on based on cul va on of . FBiH temporarily uncul vated land • “Road map” • Fixed-cost reduc on due to increase of . RS milk produc on • Stable and rela vely high milk incen ves • Specializa on in milk produc on • Holdings enlargement and herd size • Possibili es of achieving permanent and enlargement (bigger herd) stable income from milk produc on and sales 4. Threats Processing Processing . FBiH . RS • Ecological produc on • Delay with payment of collected milk . RS • Unstable milk collec on (some dairies • Increase of milk collec on price (but it stop or reduce milk collec on out of o en varies) season) • Increase of milk processing quan ty and Markets dairy produc on programme dispersion . FBiH Markets • Bilateral and mul lateral agreements on . FBiH the recogni on of standards • Consumer habits – 172 litres/person/ • Cheap imports year; following nutri on trends • Reduc on of CEFTA (as countries join the • Mul lateral agreements EU) . RS • Supermarkets/Contracted produc on • Direct marke ng of milk and milk products . RS • Opening EU market for milk products • Import of milk and milk products (unfair from Bosnia and Herzegovina compe on) • Frequent varia on in milk prices Finance Finance . FBiH • IPARD . FBiH • Development fund of Bosnia and Ins tu ons Herzegovina . RS . RS • Access to IPARD and other development • Unfavourable lending policy (high interest funds (investment grants) rates)

213 Ins tu ons • Dairies’ monopoly . FBiH • Lack of goat produc on incen ves (due to that there is li le goats’ milk) • Administra on – Cost of credit, obtaining credit/Development (entrepreneurial • Bosnia’s entry into the EU (which infrastructure) producers lose and which benefi t) • System for ensuring food quality and safety Other . RS . FBiH • Poor and expensive veterinary services • Non-existence of “knowledge services” (even though veterinary services are for accession priva zed) • Undeveloped infrastructure (water/ • Shortage of ins tu ons for milk product roads/electricity) quality control • Lack of local patrio sm (in food-buying) • Shortage of ins tu ons for cer fi ca on . RS of achieving par cular standards • Climate change (less rain, higher average Policy temperature) • More costly animal fodder and other raw . FBiH materials (fuel) Budget for subsidies and policies • • Pollu on of environment (water, soil, air) Environment/Uncertainty/Unresolved • • Zoonoses (animal diseases) status/Long-term policy stability • Poor quality of semen for ar fi cial • Implementa on of EU standards insemina on Lack of a long-term strategy for • • Natural disasters (drought, hail, fl oods) development of the sector and their infl uence on feed prices Poli cians – not understanding needs • • Complicated procedures of issuing . RS construc on, ecological and other • Low milk price (lower than in Croa a and permissions the EU) • Unstable poli cal situa on in Bosnia and • Tax policy (introducing VAT on raw Herzegovina materials)

214 ANNEX 3

Processing Survey Ques onnaires

I. Dairies Nameofdairy Dateofvisit 1 Background Comments 1.1 Yearestablished year 1.2 Originalcapacity tonnesp.a. 1.3 Presentaveragecapacity tonnesp.a. 1.4 Numberofemployees number 1.5 Tonnes milk/employee 2 Milkcollection 2.0 Numberofcollectionlines number 2.1 Area1 W litres/day 2.2 Area2 IM litres/day 2.3 Area3 GM litres/day 2.4 Area4 GS litres/day 2.5 Area5 SA litres/day 2.6 Area6 ZG litres/day 2.7 Area7 BJ litres/day 2.8 Area8 SP litres/day 2.8.1 Owntransport 1/0 2.8.2 Contractedtransport 1/0 2.8.3 Byagents 1/0 2.9 Numberofcollectionvehicles number 2.10 Totalcapacityofvehicles tonnes 3 Currentmilksupply 3.1 Numberof number suppliers 3.2 Averagemilkintakeperday litres/day 3.3 Volumeofcooledmilk litres/day 3.4 Arethereoccasionsofmilksurplus 1/0 3.5 Averagelitrespersupplier litres/day 3.6 AverageexͲfarmpricefor2010 KM/litre 3.7 Isthereamilkqualityimprovement 1/0 incentive 3.8 Frequencyofpaymenttoproducers 3.8.1 Monthly 1/0 3.8.2 weekly 1/0 3.8.3 twicemonthly 1/0 3.9 Numberoflactofreezersownedbydairy number 3.10 Lactofreezercapacity tonnes Lactofreezercapacityas%ofdailyintake % 3.11 NumberofMilkCollectionCentres(MCC) number 3.12 MCCcapacity tons 4 Milkcompositionandhygienedata 4.1 Fat% % 4.2 Protein% % 4.3 snf% % 4.4 Addedwater(failFPDtest) %ofmilk 4.5 Antibiotics(fail %ofmilk test) 4.6 TBC number/ml 4.7 SCC number/ml 4.8 Alkotest 1/0

215 5 Internalqualitycontrol 5.1 Samplingfrequency daily monthly 5.2 Atthefarm 11/0 5.3 Rawmilkon 11/0 delivery 5.4 Storagetanks 11/0 5.5 Filledproduct 11/0 5.6 Cheese 11/0 5.7 Frompasteurizer 11/0 5.8 Watersupply 11/0 5.9 HACCPcertification 11/0 6 Productsmanufacturedin2010 fat% litres/kg 6.1 Pasteurizedmilk 6.2 UHTmilk 6.3 Yoghurt 6.4 Kiselomleko 6.5 Kiselapavlaka 6.6 Butter 6.7 Kajmak 6.8 Sweetcream 6.9 Cheese FDM% tonnes 6.9.1Hard 6.9.2SemiͲhard 6.9.3Soft 6.9.4Processed 6.9.5Other 7 Conditionof: 7.1 Walls 0Ͳ5 7.2 Floor 0Ͳ5 7.3 Ceiling 0Ͳ5 7.4 Nomouldgrowth 0Ͳ5

8 Themarket 8.1 Local % 8.2 National % 8.3 Balkanregion % 8.4 Other % 8.5 Currentpricelistsupplied 1/0 9 Effluentdisposal 9.1 Owntreatment 1/0 9.2 Municipality 1/0 9.3 None 1/0 10 Externalcontrols 10.1 Whichauthoritycontrolsfinishedproductsinrespectoffood safety 10.2 Howfrequentisthiscontrol 10.3 Doestheauthoritygivefeedbackofresultsofanalyses 10.4 Whattestsareperformedbytheauthority 10.5 DoestheauthorityassesstheinͲhousequalityandHACCP systems NOTES:1/0indicates1=yes;0=no p.a.=perannum

216 II. Meat processors

Nameofplant Comments Dateofvisit 1 Background 1.1 Yearestablished Numberof 1.2 employees 1.3 Installedcapacity 1.4 Operationalcapacity

LWtkg 2 Speciespurchased Male Female 2.1 Bovine 2.2 Sheep 2.3 Pigs 2.4 Poultry

Local Import 3 Rawmaterialorigins kg av.KM/kg kg av.KM/kg 3.1 Bovine 3.2 Sheep 3.3 Pigs 3.4 Poultry 4 Transport 4.1 Company 4.2 Contractor 4.3 Other 5 Lairage 5.1 Watersupply 5.2 Hygiene 5.3 Animaltreatment 6 Slaughtering 6.1 Halal 6.2 Other 6.3 Veterinarypresence 7 Carcasshandling 7.1 Bleeding 7.2 Cutting 7.3 Removalofstomachcontents 7.4 Removalofoffal 7.5 Skinning 7.6 Cuttinghygiene 7.7 Mechanizationlevel

8 Conditionof: 8.1 Walls 8.2 Floor 8.3 Ceiling 8.4 Drainage

217 9 Productsmanufacturedin2010 kg 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9

10 Qualityassurance 10.1 HACCPinplace 10.2 Othercertification 10.3 EUstandardsaware 11 Themarket 11.1 Local% 11.2 National% 11.3 Balkanregion% 11.4 Other%

12 Effluentdisposal 12.1 Owntreatment 12.2 Municipality 12.3 None

13 Externalcontrols 13.1 Whichauthoritycontrolsfinishedproductsinrespectoffoodsafety 13.2 Howfrequentisthiscontrol 13.3 Doestheauthoritygivefeedbackofresultsofanalyses 13.4 Whattestsareperformedbytheauthority 13.5 DoestheauthorityassesstheinͲhousequalityandHACCPsystems

14 Investments('000KM)in: Plant QC other 14.1 Recent 14.2 Planned

218 ANNEX 4 Processing Case Studies

I. Case study of dairy company # 1 thus s mula ng milk quality improvement. The dairy does not, however, pay any bonus Summary for be er milk hygiene, a situa on which may be addressed when the new plant is Opera ng capacity 4,500 litres raw milk per day opera onal. Maximum capacity 6,000 litres per day No. of producers 110 Premises and processing No. of employees 15 The current premises are acceptable but HACCP Not fully – in process would require detailed a en on to meet EU standards. The owner recognizes this and Background prefers to invest in new equipment in the new loca on and refurbishing this building to the This small business enterprise is totally family appropriate standards. During the fi rst visit, owned and was founded in 2004, using part of the new site was inspected, and whilst suitable a shop’s premises to produce small quan es in size and loca on there remained more of yoghurt. Early success in the venture remedial work than the owner had planned for. demanded proper premises which were The small amount of new plant that had been built to the rear of the same shop. Further installed was of a high standard, but looked expansion was required in 2010 and a large unlikely to be completed by the November redundant, single-storey building has been deadline. This was proved true during the purchased with a view to accommoda ng second visit, and it appears that the business new plant and equipment suffi cient to meet has run out of cash for the me being. the new market demand. Process equipment is quite old, but well- Both original and new sites are situated close maintained. At such low capacity there is to a small town which also supports another, no need for automa c fi lling and packaging but smaller dairy plant. equipment. There is no real possibility Capacity that HACCP could be achieved without considerable altera ons and investment. The original capacity is of about six tonnes of milk per day, on a single shi basis, and the Product range new plant will be designed to manufacture ten tonnes per shi . There are currently . Pasteurized milk in plas c sachets 15 employees, which may need to be . Yoghurt in plas c bo les increased depending on the selec on of . Sour cream in plas c pots processing and packaging machinery. . So cheese Raw material base Yoghurt and pasteurized milk are the best Milk is collected from over 100 producers sellers but eff orts are being made to promote in three areas close to the dairy plant, at an sales of so cheese, as cheese is a useful average of 44 litres each on a daily basis. There product to make in mes of milk surplus. are 14 milk collec on points in the collec on The market area, where units are located to cool and store milk prior to collec on by company Purely local at present, but is looking to transport. Half of these lactofreezers are export to Serbia and Montenegro in the owned and supplied by the dairy company, future. However, the product range and

219 quality are unlikely to gain much export move into larger processing premises on the poten al unless the new plant is running, milk same site by the end of 2012, when the design quality improves, and packaging and product capacity will be a maximum of 25,000 litres quality are greatly improved. There is a lot of per day, planned to be achieved by 2015. compe on in the CEFTA market and these products have li le appeal. Raw material base Management and fi nance Milk is collected by the company’s road tankers from about 400 producers located The owner seems to be afraid of delega on, in four municipali es, entailing a maximum even signing invoices for 1 or 2 KM during distance of 45 km from the factory. Problems the interview. Whilst he demonstrates some of collec on occur only in severe winter vision of the future for his business he will condi ons. need to trust in others to achieve his goals. Milk quality has been improved over the last He was reluctant to discuss fi nance but two years in par cular by a company training suggested that his turnover was more than programme for milk producers, supported 1 million KM per annum. This seems an by the supply of lactofreezers in strategic understatement, and 2.5 million would be collec on centres. All raw milk is today cooled more likely. to at least 6°C on arrival at the dairy. At that level, his previous investments could Milk is subject to payment according to its have been fi nanced from profi t. composi on and hygienic quality, refl ected in the 50 percent of milk in the top band, The prognosis is not very good considering classifi ed as Ekstra Grade, and subject to a the current fi nancial climate and the size of 5 percent premium on the basic price agreed opera on. Speedy comple on of the new with producers. 10 percent of milk is of the plant at higher throughput, if the market is lowest standard, Grade 4, and reducing found, would underpin the company’s future. gradually. This milk is subject to deduc ons from the basic price, which has encouraged II. Case study of dairy company # 16 producers to improve their performance, but Summary many of these farmers have only two or three cows, so further improvements are less likely Opera ng capacity 12,000 litres raw milk per day to occur in the short term. Maximum capacity 15,000 litres per day The basic price paid is 0.58 KM per litre and No. of producers 400 there are also penal es if either water or No. of employees 31 an bio cs are iden fi ed in the milk. HACCP Yes Premises Background The building housing the offi ces, processing and services is in excep onal order This family owned business started in 1999 as concerning the condi on of walls, fl oors a rural cra shop, making nominal amounts and drains and absence of mould growth. of yoghurt. The business is established in a Modern construc on materials have been rural loca on (small village) and employs 31 used throughout. staff including family members of wife and two sons. Separate staff facili es for staff changing and toilets for men and women are in accordance Capacity with EU standards and there is a sta on It is now successfully opera ng at 12 to 15,000 installed for visitors to sterilize their hands litres of raw milk per day and preparing to and don protec ve clothing and footwear

220 prior to entry to the factory. All staff are have never suff ered late payment for their suitably a red in clean work clothes. milk and other consumables are paid for in Ligh ng in the processing area is adequate to advance in order to obtain be er terms. provide a safe working environment. The recent annual turnover is es mated to Processing be in excess of 5.5 million KM, whereas the company suggests only 3.5 million. Total costs Most of the equipment is fi ve to ten years old, have been calculated from the propor on of which is normal for a stainless-steel plant, total costs borne by milk at 55 percent. This and is well maintained and clean. The usual results in total costs of 4.6 million, an unlikely items include storage tanks, heat exchangers, scenario, bearing in mind the state of the homogenizer and separator. Packaging business. machines are automa c or semi-manual and provided with safety devices. The new, larger premises, of 1,800 sq. m. have already been paid for, but funding is needed Product range to purchase plant and equipment, although Products are as follows: some func ons of the exis ng building will form part of the new. The total budget cost of . Pasteurized milk (3.2 percent fat) packed in the new works is es mated by the company 1-litre plas c sachets at around 3.5 million KM. . Yoghurt (3.2 percent fat) packed in three sizes of plas c cups III. Case study of meat processing . Diet yoghurt (0.9 percent fat) in two sizes company # 11 . Cream (20 percent fat) in three sizes . Cheese of four types, from fresh, so to Background Kackavalj type This meat processing plant is a family owned . Kajmak of two types business established in 2003. The premises are modern and spacious, allowing a processing The market area which is well planned and full of natural Product output has steadily increased, light. The compound also houses refrigerated par cularly since 2007, in response to storage rooms and a services block, with increased demand in the market. Products adequate space for vehicle movements. are sold mainly in Bosnia and Herzegovina Source of raw materials but a propor on is exported to Montenegro. The company is inves ga ng other marke ng Three species are used in processing – pork, channels and opportuni es and considers beef and chicken, some of which are imported the plans to increase product output to be from the EU. Most of the raw material is realis c and achievable. frozen and boneless and any fresh meat is obtained from a slaughterhouse contracted Management and fi nance for the purpose and when required. Four members of the family are employed Imports from the EU are cheaper and in the business. The parents learned about of be er and more reliable quality than dairying simply by doing the job and they local material, even if this is available. It is have trained all other staff . The business is reported that the prices for EU supplies are very well run with a pleasant atmosphere 30 percent lower than locally sourced meat. between the owners and the staff . 50 percent of pork and beef are imported and The company has expanded gradually, each 20 percent of chicken, and it was stated that stage of growth funded out of profi t. This government regula ons s pulate that at least seems a reasonable conclusion, as producers 50 percent of processed meat products shall

221 be of domes c supply (presumably in order to Further to the export situa on, the company acquire a BiH Cer fi cate of Origin for export). states that Serbia and TfYR Macedonia enjoy a 20 percent export subsidy on their Raw material bears the highest share of total products into Bosnia and Herzegovina, a opera ng costs at 75 percent, ensuring that subject of great concern. In addi on, TfYR the company seeks the cheapest source at Macedonia allows imports of meat products the desired quality. free of duty. Plant capacity Because Bosnia and Herzegovina has yet to The plant is opera ng at 50 percent of its upgrade its regula ons for the meat industry design capacity of 10 tonnes of product per according to EU requirements, there are day, and un l the economic situa on improves frequent and costly delays at border control there is no plan to reach the maximum. Of points. par cular concern is the lack of government Management and fi nance support for exporters and poor regula on. The owners are experienced in the meat Product range business and are progressive in their There is a narrow product range in comparison approach to the future. Even at 50 percent to other processors, consis ng en rely of of single-shi design capacity the company canned tradi onal products, principally reports an annual turnover in excess of 5 goulash and pâtés, which are classed as million KM, enabling some investment from semidurable. its own resources. The management reports that its main The cans used in produc on are supplied from constraints are: either Croa a or Serbia and are pre-printed, except for 10 percent which are blank and . Recurrent cash-fl ow problems due to late require labelling on-site. payments by some customers . Compe on from imported products The company has achieved HACCP cer fi ca on . Inconsistencies in trade with CEFTA through an Austrian agency, but is concerned that any meat from local slaughterhouses will . Lack of policy from the State not be in compliance with HACCP. . Cost of credit at 9 percent interest The market Cost structure, other than for raw materials, is as follows: Ninety percent of product is sold on the . Labour: 10 percent local market, and the balance exported to . Packaging: 10 percent Serbia, Croa a and Montenegro. Concerns regarding the Croa an market, when it joins . Credit: 5 percent the EU, have been partly resolved by working The company has invested 150,000 KM in with a Croa an company that will request 2011 in canned product technology and plans permission for meat products made in Bosnia to invest a further 500,000 KM in respect of and Herzegovina to be imported into Croa a. cold storage and a drying chamber for dried During the last four years, the company has meat products. secured export sales of chicken pâté to Croa a at an average of 40 tonnes per annum. Conclusion This procedure is already in place and This small opera on is conducted in an opera ng in exports to Serbia, where the enterprising manner and should prove a product details are in Serbian but include the suitable candidate for IPARD funding. The words “Made in Bosnia”. management a ended the meat industry

222 workshop and were pleased to learn more product range a high degree of automa on of IPARD procedure and where funds could has been incorporated. The plant has be applied to the business i.e. produc on recently been increased by an area of more improvements and purchase of essen al than 3,000 sq.m. using modern construc on equipment. materials, such as thermally insulated panels which are epoxy-coated for easy cleaning and IV. Case study of meat processing maintenance of hygiene. company # 4 There are around fi y permanent employees in the processing plant with a further fi y Background employed in marke ng, fi nance and other The company has a long family history of commercial ac vi es. meat industry business, forged on a chain The processing unit has achieved HACCP of butchers’ shops in 1943. The ownership cer fi ca on through SGS and the company transferred in 1987 to the current family has also been awarded cer fi ca on under descendent, when meat processing became ISO 9001:2008. the focus rather than fresh product. Product range During the Balkan confl ict all the company’s assets were destroyed and in 1997 a fresh The off er of more than forty bar-coded start was made in a new loca on, using a loan products includes long shelf-life smoked from government. By December 1999 the items, which account for over 50 percent of new plant was equipped in accordance with output and are mainly of beef and veal. Other EU standards, with support from a foreign products are: donor agency. . Dried meat in slices Source of raw materials . Mortadella . Cooked sausage Raw material is confi ned to beef, veal, chicken and turkey, 60 percent of which is currently . Smoked beef and veal joints imported, mainly from the EU. Poultry imports . Smoked turkey are about 35 percent of total requirements Product quality control is carried out by the and are mainly of frozen, boneless chicken. appropriate Ins tute of Food Hygiene, taking Turkey products, a recent introduc on, are daily samples of each product and tes ng for manufactured using fresh meat produced in microbiology and heavy metals. Bosnia and Herzegovina, about 40 km distant from the plant. The market Plant capacity The company tradi onally has a strong presence in the local market and enjoys a The maximum capacity is 15 tonnes of reputable brand name and a reputa on for fi nished product per day which can only be high quality products. The export market accomplished by opera ng an extra shi is envisaged to be essen al for the future for packaging. Deliveries to the market are security of the business and an Austrian conducted during a night-shi to ensure daughter company was recently formed. The that customers receive their orders before company states that “We have been given an morning opening. In 2010, the company opportunity to overcome the obstacle when reports that produc on reached more than expor ng meat products from Bosnia and 1,000 tonnes. Herzegovina to EU countries. Currently, the Plant and equipment are in excellent plant, employing thirty workers, exports meat condi on and because of the specialized products to EU-12 countries”.

223 About fi een own label brands have been Management complains of the cash- developed in parallel with specifi c retailers, fl ow problems that o en plague the food which have proved very successful, which is processing industry as well as the lack of seen as another way forward in securing the government support for the industry’s eff orts company’s progress and sustainability. to secure be er export terms. Management and fi nance The company considered that it was well able to face compe on from imports and is The management was reluctant to provide already planning a marke ng strategy for the fi nancial details but it is es mated that the future, up to and including EU accession. business should generate about 6 million KM of turnover per annum. Conclusion The company has recently invested 100,000 The business is very well managed especially KM in extra processing equipment and a in terms of sales and marke ng. The senior further 1 million KM investment is planned team members display enthusiasm for their for cold-smoking facili es in par cular. Funds work, and it appears that their future is are also to be a ained for improvements to secure, but dependent as always on any the effl uent plant. seriously adverse circumstances.

224 ANNEX 5

Milk sampling numbers

I. Producers samples by dairies, 2011 The following table shows the number of suppliers to each dairy, for whom milk samples were submi ed to the Banja Luka laboratory by the dairy itself, indica ng direct collec on: Dairy Jan Feb Mar Apr May Jun Jul Aug Sep Ave Max Min Cetkovic 25 25 28 28 22 56 54 48 46 37 56 22 Culic 239 257 231 272 295 290 252 263 249 261 295 231 DTD Njego na 23 9 9 15 7 9 9 9 10 23 7 Pramon 17 20 20 19 18 20 23 22 23 20 23 17 Dule 154 159 159 175 180 186 188 185 180 174 188 154 Glogovac 40 87 88 88 93 92 101 52 111 84 111 40 Inmer (FBH) 203 124 220 210 176 238 262 287 313 226 313 124 Mljekoprodukt 3,172 2,755 3,162 2,736 2,714 3,311 3,187 3,112 3,002 3,017 3,311 2,714 Maja 14 14 7 13 13 12 13 10 14 12 14 7 Naturavita 1,049 1,254 1,138 1,166 1,280 1,532 1,393 1,282 1,567 1,296 1,567 1,049 Mikaprom 18 19 18 17 21 22 25 25 23 21 25 17 Mikroprom 253 247 245 233 240 238 234 247 247 243 253 233 Milkos FBH) 395 399 390 347 376 423 455 444 431 407 455 347 Padeni 334 354 363 377 395 388 402 402 393 379 402 334 Sipovo 143 135 117 117 116 134 138 144 155 133 155 116 Cokolac 18 18 16 15 17 19 10 20 20 17 20 10 Perfe o 484546475555556064536445 Meggle (FBH) 79 81 79 81 81 80 80 80 80 80 81 79 Ekoﬂ ora 7 8 6 - - - 10 10 11 6 11 - Total: 6,474

225 II. Producers sampled by middlemen and milk collectors 2011 The following table shows the number of suppliers to each dairy, for whom milk samples were submi ed to the Banja Luka laboratory by registered milk collectors:

Dairy Jan Feb Mar Apr May Jun Jul Aug Sep Av. Max Min Agronumera 13 15 15 15 17 14 17 16 13 15 17 13 Agromilk 17 18 18 21 21 22 18 13 11 18 22 11 Agropan 12 13 11 11 13 14 13 74 77 26 77 11 Agrosemberija 508 575 622 591 605 596 591 603 542 581 622 508 Albo 28 27 30 28 29 27 23 25 22 27 30 22 Ancelka 208 195 190 155 168 198 101 119 122 162 208 101 Bogar-Agro m202023171822222528222817 C.Zvjelzda 20 21 22 22 24 24 17 25 26 22 26 17 Dama Herc 123 122 125 129 140 147 146 153 155 138 155 122 Dragul 41 40 41 38 40 59 41 41 42 43 59 38 Farmland 2 2 1 1 1 3 3 2 2 2 3 1 Kojcinovac 190 193 192 201 219 212 201 183 181 197 219 181 Pd. Gacko 2 2 1 2 2 2 2 2 2 2 1 Kalinovik 0 0 4 8 7 17 6 20 10 8 20 - Skandi 16 19 19 20 22 24 21 23 19 20 24 16 Rakic 31 30 36 26 12 27 23 26 29 27 36 12 Trnovka 151415151415141414141514 Zam Mrtvica 53 53 52 56 50 47 44 43 41 49 56 41 MK Kompani 31 31 27 24 32 31 30 27 30 29 32 24 ZZ Obudovac 24 24 20 21 18 17 19 21 23 21 24 17 SBDC 57 5 11 19 18 16 0 0 0 14 57 - Zena Trunova 7 7 7 8 8 8 8 8 8 8 8 7 Trnjaci 53 112 111 50 85 98 40 41 42 70 112 40 ZZ Mitrovic 1 1 1 1 1 1 1 1 1 1 1 1 PD Semberija 1 2 1 1 2 2 2 2 2 2 2 1 PD Nevesinje 3 2 3 2 2 3 3 3 4 3 4 2 Vitafarm 0 0 0 0 0 131 147 148 210 71 210 - Prijedol

226 III. Summary These data indicate that the overall supply of milk to dairies in RS, both directly and via middlemen, is as follows:

Producer samples supplied by middlemen 1,590 20%

Producer samples supplied by dairies 6,474 80%

Total producers 8,064

IV. Notes . Data are in broad agreement for the number of producers supplying to dairies that were visited. . Dairies in FBiH are tested in Banja Luka only for milk purchased in RS. . Middlemen account for 20percent of all producers sampled in the Banja Luka laboratory and collect from an average of 59 producers’ milk each . Middlemen are registered to collect and allocate milk subsidy. . Middlemen operate mainly in remote areas or where there is a large number of small producers. . Milk is collected in cans and will be delivered to small processors in the same. . There was no conﬁ rma on that larger dairies received any of the middlemen’s milk. . There is no record of volumes collected which are not recorded by the laboratory. . The laboratory staﬀ had no comment to make as to a similar collec on process in FBiH.

Data supplied by the Veterinary Ins tute, Milk Tes ng Laboratory, Banja Luka 1 November 2011

227 228 ANNEX 6

Checklist for an EU-standard dairy farm

Infrastructure Cow housing Ca le buildings should be sound and weatherproof (w, p). Windows or openings should allow natural light and ven la on (H, w, p). Ar fi cial light should be adequate to examine sick animals at any me (h). Lying areas should be sound, easy to clean, and designed so that cows do not normally dung on the lying area (h). Floors and dung passages should be sound, easy to clean, and with good drainage for liquid effl uent (h). Drinking water should be available to all cows at almost all mes (w, p). Forage should be available to all cows at almost all mes (p). Exercise yard should be sound and cleanable, and available to all cows regularly (w, h). Manure storage should be away from the milking and milk storage areas, and should avoid leakage into water courses (h, e). Milking facili es Milking area (parlour or stable) should be well lit and easy to clean (H). Milking should be by machine, which should be well maintained and fi ed with a pulsator (h). Milking equipment, containers and anything else that comes into contact with milk must be in good condi on, and easy to clean and disinfect (H). Milk handling and storage area should be separate from the livestock housing, easy to clean, protected from vermin, with a supply of hot and cold water and hand-washing facili es (H). Milk cooling should be available immediately a er milking and capable of cooling the milk rapidly to 8°C (H). Forage and feed facili es Hay storage (if applicable) should be protected from rain; a baler is an advantage (p). Forage harvesters (if applicable) should be double- or precision-chop, and maintained in good condi on (p). Silage clamps (if applicable) should keep effl uent away from water courses (e). Feed storage should be weatherproof, ideally protected from vermin, and with space and/ or equipment to mix feed; a roller mill is an advantage (p).

229 Key H = specifi c EU hygiene requirement; h = implied hygiene requirement (i.e. diffi cult to sa sfy all hygiene requirements without this). W = specifi c EU welfare requirement; w = implied welfare requirement. E = specifi c EU environmental standard; e = implied environmental standard. P = essen al for profi table milk produc on (i.e. contributes to higher yields, lower costs or less labour use); p = important contributor to profi table milk produc on.

References Not a comprehensive list. . Regula on EC 853/2004 “Laying down speciﬁ c hygiene rules for food of animal origin”. . Council Direc ve 98/58/EC “On the protec on of animals kept for farming purposes”. . European Conven on for the Protec on of Animals kept for Farming Purposes, which sets out “Five Freedoms”: • Freedom from hunger and thirst – access to fresh water and a diet for full health and vigour, • Freedom from discomfort – an appropriate environment with shelter and comfortable rest area, • Freedom from pain, injury and disease – preven on or rapid treatment, • Freedom to express normal behaviour – adequate space and facili es, company of the animal’s own kind, • Freedom from fear and distress – condi ons and treatment which avoid mental suﬀ ering.

Management Management requirements and hygiene standards to be achieved are listed in legisla on, but are not included here since they are not part of “infrastructure”.

230 ANNEX 7

Es mated farm and animal numbers by en ty

The following pages present en ty level es mates of farm and animal numbers, produced with the methodology explained in sec on 3.1 of the main report and used throughout. It should be noted that the es mates of farm numbers have been made independently for each species, and so the same farm might be included under “Ca le” as well as “Sheep”, for example. Es mates concerning small numbers of farms are subject to rela vely high sampling error; this applies par cularly to many of the farm types in Brčko District, where only the livestock totals for the en re District should be treated as reliable.

231 I. Federa on of Bosnia and Herzegovina

Av. herd CATTLE: Farm type Defi ni on Farms Ca le Cows size Dairy, house cow 1 milking cow 58,252 73,000 58,000 1.3 Dairy, small dairy farm 2–5 milking cows 15,647 54,000 37,000 3.5 Dairy, medium dairy farm 6–20 milking cows 450 8,000 4,000 16.8 21–100 milking cows (usually Dairy, large dairy farm 26 1,000 1,000 54.0 private) > 100 milking cows (usually legal Dairy, corporate dairy farm 8 3,000 2,000 340.7 unit) Dairy cows and purchased beef Dairy-beef farm 1,819 13,000 3,000 7.0 ca le Beef breeding Beef cows 2,918 5,000 4,000 1.7 Beef fa ening, small 1–10 beef ca le 6,463 13,000 0 2.0 Beef fa ening, large > 20 beef ca le 44 4,000 0 99.6 All ca le farms 85,627 174,000 109,000 2.0 Av. fl ock SHEEP: Farm type Defi ni on Farms Sheep Ewes size Sheep fa ening, household 1–5 lambs, no ewes 508 1,000 0 2.0 Sheep fa ening, commercial > 5 lambs, no ewes 953 29,000 0 30.0 Sheep breeding, household 1–5 breeding ewes 6,805 28,000 21,000 4.2 Sheep breeding, small 6–20 breeding ewes 7,590 121,000 86,000 16.0 Sheep breeding, medium 21–100 breeding ewes 3,082 193,000 145,000 62.7 Sheep breeding, large > 100 breeding ewes 630 226,000 171,000 358.6 All sheep farms 19,568 598,000 423,000 30.6 Av. herd PIGS: Farm type Defi ni on Farms Pigs Sows size 1 breeding sow (may also fa en Pig breeding, household 4,123 16,000 4,000 4.0 piglets) Pig fa ening, household 1–3 fa ening pigs, no sows 17,251 33,000 0 1.9 Pig fa ening, commercial > 3 pigs (no sows) 1,385 7,000 0 5.3 Pig breeding-fa ening, > 1 breeding sow (fa ening most 163 5,000 1,000 30.7 commercial piglets) > 1 breeding sow (selling most Pig breeding, commercial 2,538 19,000 7,000 7.6 piglets) All pig farms 25,461 81,000 11,000 3.2 Av. fl ock POULTRY: Farm type Defi ni on Farms Hens Layers size Laying hens, household 1–20 laying hens 67,489 745,000 600,000 11 Laying hens, small 21–500 laying hens 8,658 554,000 381,000 64 commercial Laying hens, large > 500 laying hens 50 700,000 699,000 14,100 commercial Broiler hens, household/ <= 1,000 broilers per cycle, no 10,831 244,000 0 23 small commercial laying hens Broiler hens, large > 1,000 broilers per cycle, no 227 2,629,000 0 11,575 commercial laying hens All poultry farms 87,255 4,871,000 1,680,000 56

232 II. Republika Srpska

Av. herd CATTLE: Farm type Defi ni on Farms Ca le Cows size Dairy, house cow 1 milking cow 43,430 59,000 43,000 1.3 Dairy, small dairy farm 2–5 milking cows 18,820 73,000 47,000 3.9 Dairy, medium dairy farm 6–20 milking cows 799 13,000 7,000 15.7 21–100 milking cows (usually Dairy, large dairy farm 43 2,000 1,000 54.3 private) > 100 milking cows (usually legal Dairy, corporate dairy farm 19 5,000 4,000 270.5 unit) Dairy cows and purchased beef Dairy-beef farm 2,757 21,000 4,000 7.6 ca le Beef breeding Beef cows 2,533 5,000 4,000 2.1 Beef fa ening, small 1–10 beef ca le 5,710 14,000 0 2.5 Beef fa ening, large > 20 beef ca le 81 9,000 0 104.6 All ca le farms 74,192 201,000 111,000 2.7 Av. fl ock SHEEP: Farm type Defi ni on Farms Sheep Ewes size Sheep fa ening, household 1–5 lambs, no ewes 1,037 2,000 0 2.2 Sheep fa ening, commercial > 5 lambs, no ewes 2,274 59,000 0 25.8 Sheep breeding, household 1–5 breeding ewes 13,895 62,000 47,000 4.5 Sheep breeding, small 6–20 breeding ewes 19,756 328,000 234,000 16.6 Sheep breeding, medium 21–100 breeding ewes 5,715 319,000 241,000 55.9 Sheep breeding, large > 100 breeding ewes 358 144,000 113,000 401.5 All sheep farms 43,035 914,000 634,000 21.2 Av. herd PIGS: Farm type Defi ni on Farms Pigs Sows size 1 breeding sow (may also fa en Pig breeding, household 18,806 96,000 19,000 5.1 piglets) Pig fa ening, household 1–3 fa ening pigs, no sows 59,309 111,000 0 1.9 Pig fa ening, commercial > 3 pigs (no sows) 6,469 44,000 0 6.8 Pig breeding-fa ening, > 1 breeding sow (fa ening most 1,755 79,000 10,000 45.1 commercial piglets) > 1 breeding sow (selling most Pig breeding, commercial 13,046 156,000 42,000 12.0 piglets) All pig farms 99,385 487,000 70,000 4.9 Av. fl ock POULTRY: Farm type Defi ni on Farms Hens Layers size Laying hens, household 1–20 laying hens 96,852 1,261,000 1,079,000 13 Laying hens, small 21–500 laying hens 12,199 528,000 435,000 43 commercial Laying hens, large > 500 laying hens 142 1,629,000 1,627,000 11,506 commercial Broiler hens, household/ <= 1,000 broilers per cycle, no 17,707 320,000 0 18 small commercial laying hens Broiler hens, large > 1,000 broilers per cycle, no 176 3,478,000 0 19,766 commercial laying hens All poultry farms 127,076 7,217,000 3,140,000 57

233 III. Brčko District

Av. herd CATTLE: Farm type Defi ni on Farms Ca le Cows size Dairy, house cow 1 milking cow 762 1,075 762 1.4 Dairy, small dairy farm 2–5 milking cows 512 2,402 1,417 4.7 Dairy, medium dairy farm 6–20 milking cows 46 821 467 17.7 21–100 milking cows (usually Dairy, large dairy farm 3 113 59 44.2 private) > 100 milking cows (usually legal Dairy, corporate dairy farm 1 128 90 256.5 unit) Dairy cows and purchased beef Dairy-beef farm 103 993 183 9.6 ca le Beef breeding Beef cows 51 128 90 2.5 Beef fa ening, small 1–10 beef ca le 124 394 0 3.2 Beef fa ening, large > 20 beef ca le 3 184 0 60.3 All ca le farms 1,605 6,000 3,000 3.9 Av. fl ock SHEEP: Farm type Defi ni on Farms Sheep Ewes size Sheep fa ening, household 1–5 lambs, no ewes 8 19 0 2.4 Sheep fa ening, commercial > 5 lambs, no ewes 10 186 0 17.9 Sheep breeding, household 1–5 breeding ewes 105 505 394 4.8 Sheep breeding, small 6–20 breeding ewes 111 1,724 1,227 15.5 Sheep breeding, medium 21–100 breeding ewes 6 351 278 63.3 Sheep breeding, large > 100 breeding ewes 1 - - - All sheep farms 241 3,000 2,000 11.6 Av. herd PIGS: Farm type Defi ni on Farms Pigs Sows size 1 breeding sow (may also fa en Pig breeding, household 453 2,911 473 6.4 piglets) Pig fa ening, household 1–3 fa ening pigs, no sows 873 1,900 0 2.2 Pig fa ening, commercial > 3 pigs (no sows) 185 1,528 0 8.2 Pig breeding-fa ening, > 1 breeding sow (fa ening most 90 4,089 470 45.3 commercial piglets) > 1 breeding sow (selling most Pig breeding, commercial 442 6,824 1,574 15.5 piglets) All pig farms 2,043 17,000 3,000 8.4 Av. fl ock POULTRY: Farm type Defi ni on Farms All hens Layers size Laying hens, household 1–20 laying hens 2,255 33,677 27,384 15 Laying hens, small 21–500 laying hens 485 19,808 16,110 41 commercial Laying hens, large > 500 laying hens 0.4 7,714 7,714 19,285 commercial Broiler hens, household/ <= 1,000 broilers per cycle, no 473 9,291 0 20 small commercial laying hens Broiler hens, large > 1,000 broilers per cycle, no 12 62,901 0 5,376 commercial laying hens All poultry farms 3,226 133,000 51,000 41

234

This project is funded by the European Union

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Regional Office for Europe and Central Asia Food and Agriculture Organization of the United Nations (FAO) The Meat and Dairy Sector in Benczúr u. 34, 1068 Budapest, Hungary Telephone: (+36) 1 461 2000 Fax: (+36) 1 351 7029 Bosnia and Herzegovina Email: [email protected] Website: www.fao.org/europe/en Preparation of IPARD Sector Analyses in Bosnia and Herzegovina Electronic Version of the report: http://www.fao.org/europe/publications/documents-and-reports/IPARD-BiH/

2012 The Meat and Dairy Sector in Bosnia and Herzegovina Sector and Dairy Meat The

FAO Regional Office for Europe and Central Asia

31 August 2012

FAO Regional Office for Europe and Central Asia